The Alaska Landmine has obtained a memo from Craig Richards, Chair of the Board of Trustees of the Alaska Permanent Fund Corporation (APFC), and Angela Rodell, CEO of the of the APFC, to Senators Bert Stedman (R – Sitka) and Natasha von Imhof (R – Anchorage). They Co-Chair the Senate Finance Committee. Senate Finance Committee members also received the memo.
The memo is in response to questions from Senator Donny Olson (D – Golovin) at a January 25th meeting of the Senate Finance Committee meeting.
The full memo can be seen here:
Part of the response to a question about the view of the APFC Board of Trustees and staff about the proposed draws shows that the APFC is supportive of Governor Michael J. Dunleavy’s plan to pay dividends, yet does not take a position on what the amount of dividends should be.
That means the APFC supports following, on a go forward basis, the constitutional and statutory rules provided under Alaska law for payment of dividends and inflation proofing. The Board of Trustees has taken a strong position that inflation proofing should occur (Resolution Nos. 17-01, 18-01, and 18-04). The APFC has no position on what dividends should be, so long as they are paid according to the statutory formula in effect at the year of transfer (Resolution Nos. 18-01 and 18-04) as part of the overall rules-based distribution from the ERA.
Governor Bill Walker vetoed a portion of the PFD in 2015 in response to the multi billion dollar deficit after oil prices collapsed. This had never been done before. After the initial veto, the legislature ended up appropriating dividends smaller than what the historical formula would have been for the next two years.
A big part of Mike Dunleavy’s campaign was not only paying a full PFD, but also paying back the portions of the previous dividends that were reduced. The Alaska Supreme Court ruled that what Walker did was legal as, according to them, the PFD is subject to appropriation by the legislature.
It will be interesting to see how the legislature deals with the PFD issue this year. There is the question of the amount of the dividend Dunleavy is requesting, $3,000, plus the payback of the previous dividends. Dunleavy has proposed a payback scheme over three years. This year the additional amount is proposed at $1,061. If the legislature adds money into his proposed budget, which is very likely, the deficit will increase.
Dunleavy has made it clear he does not support new taxes to pay for government. So even if the legislature passed an income or sales tax, which is extremely unlikely, Dunleavy would veto it. A veto override would be as likely as me getting elected governor. Using money from the Constitutional Budget Reserve (CBR), which only has a few billion dollars remaining, requires a 3/4 vote of each body. Using money from the permanent fund earnings reserve only requires a simple majority.
The legislature could add money to the budget and appropriate a smaller dividend to pay for it. Governor Dunleavy could veto any increases in the budget. However, he cannot add money back in. The fight over the dividend could end up being the big showdown as the legislative session nears completion.