$2,272 vs. $1,360 PFD debate develops as lawmakers draft operating budgets

JUNEAU, Alaska (KTUU) - As House Finance Committee members prepare to hear amendments to the latest draft of an operating budget, including a $2,272 Permanent Fund dividend, House Minority members raised concern Tuesday, as they said to expect amendments as well as their support for the Senate’s lower $1,360 PFD proposal.

“I’m not going to get into the specific number of amendments but what I will say is you’ll see some preliminary amendments focusing on some of the big meat and potato issues that we’ve identified right off the bat,” House Minority Leader Calvin Schrage, I-Anchorage, said.

When House Finance members rolled out their draft budget last week, Committee Co-Chair Delena Johnson, R-Palmer, said the bigger dividend would still leave the state with a $150 million surplus.

“Many of you know that we started with a full statutory dividend, which would leave us over a billion dollars in deficit spending,” Johnson said. “One of the goals that we started this process with was to make sure that we had a balanced budget so we didn’t make it to a 50-50 [formula] but it does represent the third largest dividend in Alaska’s history.”

Tuesday, Schrage saw it differently, saying minority members feel the proposal prioritizes PFD spending over firm investments in core areas such as education, childcare and workforce development.

“I’d also like to note that even with that failure to invest in those services, because a dividend has been so prioritized, there is little money left available to address a capital budget let alone legislation that the Legislature might pass before the end of the session this year,” Schrage said.

So far, some committee members have argued a $200 million surplus from higher oil prices the last couple of budget years paired with the House’s draft plan projecting another $152 million surplus next budget year makes the combined $2,272 PFD-energy relief check possible.

However, longtime Senate Finance Committee Co-Chair Bert Stedman, R-Sitka, said the surplus the House majority is banking on could quickly disappear. Stedman cited the $40 million Internet school funding bill that just passed, the $23.5 million senior benefits legislation that passed the Senate and other legislation that may pass before the end of the session.

That’s why Sen. Lyman Hoffman, D-Bethel, said he was citing a funding formula where lawmakers use 75% of the Permanent Fund’s annual draw to pay for state services and the other 25% would be used to fund a $1,360 PFD, instead of dipping into saving to fund the higher $2,272 PFD.

“I personally would rather see a steady 25% dividend out to the public than in a year or two years, we have no dividend at all,” Stedman said. “And that’s what we run the risk of doing is eliminating the dividend by overextending our finances continually to pay off something that we know that we can’t maintain.”

During their Tuesday news conference, House minority members expressed support for the 75-25 funding formula.

“I am likely to run an amendment to that end,” Rep. Sara Hannan, D-Juneau, said.

The current House draft proposal also only contains one-time $175-million funding for public education — equal to a $680 base student allocation, or BSA. House minority members worry the governor could veto that because it’s the same amount Dunleavy vetoed in the comprehensive education bill.

Schrage feels there is pressure on lawmakers to pass permanent education funding increase this session.

“I would note that when you’re left with one-time funding, you’re left subject to an appropriation veto by the governor. While we’re very pleased to see $680 put forward in the House budget, I know that that was also the number put forward in last year’s budget, which was ultimately vetoed in half,” Schrage said.

The House Finance Committee is scheduled to resume discussion on the draft operating budget on Wednesday.