- Associated Press - Tuesday, May 8, 2018

JUNEAU, Alaska (AP) - The Alaska Legislature on Tuesday approved a key piece of a plan to address the state’s persistent budget deficit - and one of the last unresolved pieces of the extended legislative session.

The bill, which advanced from a conference committee earlier in the day, calls for limited withdrawals from Alaska Permanent Fund earnings. Money taken out would help pay for state government costs and be used to pay the annual checks residents receive from the oil-wealth fund.

The bill does not say how the money would be divided among the two needs in future years.

The measure passed the Senate 13-6 and the House 23-17.

Gov. Bill Walker watched the House debate from a gallery in the chamber. He called the legislation landmark.

The vote is notable: While legislators have long been able to spend from permanent fund earnings, they have been reluctant to do so for fear of being accused of raiding the account that’s used to pay out dividends.

But with savings accounts drawn down, oil revenue sagging and differences over taxes and budget cuts, they reached a point where there wasn’t much recourse.

The bill keeps in place the existing dividend calculation. However, that’s no guarantee a full dividend based on that calculation will be paid in the future.

The calculation was disregarded the past two years, first by Walker and then by lawmakers as legislators struggled with how best to address the deficit.

As part of budget deliberations, lawmakers proposed for this year a $1,600 dividend, which Walker endorsed. That’s about $1,000 less than if the existing dividend calculation were followed.

“We’ve done as much as we can at this point,” said Rep. Neal Foster, a Democrat from Nome, noting that the dividend remains a contentious topic in the House.

He told reporters the conference committee plan is an “incremental approach,” that addresses a big piece of the fiscal problem.

Some critics of the plan said it doesn’t protect dividends.

Sen. Bill Wielechowski, an Anchorage Democrat, said the bill is meaningless, not monumental, and said the rules it lays out can be ignored.

Sen. Anna MacKinnon, an Eagle River Republican, said the bill isn’t a “silver bullet,” and money will still be needed from savings Alaska has in its constitutional budget reserve to help fill the gap. But she said it fixes 80 percent of the problem.

No one in the Senate wants to reduce Alaskans’ dividends, she said on the Senate floor. But these are unprecedented times, she said.

Three-quarters of lawmakers in the House and in the Senate would have to vote in favor of taking money from the budget reserve to fill the rest of the gap.

To reach that threshold in the Republican-led Senate, support would be needed from Democrats or possibly Republicans who have broken ranks in the past on votes.

The House is led by a majority coalition largely composed of Democrats, so support would be needed from the Republican minority.

House Minority Leader Charisse Millett, an Anchorage Republican, said the minority Republicans have requested the lowest possible budget in return for supporting using money from the constitutional budget reserve.

She acknowledged the spending level her members would be comfortable with varies and said budget negotiations were ongoing.

Lawmakers are trying to reach agreements to end the extended legislative session. Unresolved are the state operating and capital budgets and a bill from Walker to allow bonding to pay the state’s remaining oil and gas tax credit obligations.

Legislators worked past the 90-day, voter approved session limit in mid-April. The 121-day constitutional limit for regular sessions would be May 16.

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