Typically, the Senate Finance Committee works out their problems behind closed doors and then presents a unified front during their public meetings. But yesterday’s meeting was a rare departure from that norm. It occurred when the committee debated a bill that changes the Permanent Fund Dividend formula.

Yesterday, the committee introduced a committee substitute for Senate Bill 107. SB 107 is a Senate Finance bill that provides for a 25/75 dividend (approximately $1,300) based on the yearly draw from the Permanent Fund, with a step up option to a 50/50 dividend (approximately $2,600) if certain conditions are met. In the original version of the bill, which is supported by Senator Lyman Hoffman (D – Bethel), $900 million in new revenue would be required by 2036 to trigger a 50/50 dividend.

In the committee substitute, the number for new revenue increased to $1.3 billion and the time frame was reduced to 2031. It also adds a provision that the Constitutional Budget Reserve (CBR) have a minimum balance of $3.5 billion to trigger the 50/50 dividend. The CBR has approximately $2.3 billion, but that number could decrease if draws are required for the supplemental budget or next year’s budget. The recently passed House version of the operating budget has a $600 million deficit based on the Spring Revenue Forecast.

The committee voted 4-3 to adopt the committee substitute, highlighting the division among the committee comprised entirely of majority members. Senator Bert Stedman (R – Sitka), who supports the new provisions, was joined by Senators Jesse Kiehl (D – Juneau), Click Bishop (R – Fairbanks), and Kelly Merrick (R – Eagle River) in adopting the committee substitute. Hoffman, who was against the committee substitute, voted no along with Senator Donny Olson (D – Golovin) and David Wilson (R – Wasilla). Because the Senate majority is so large, the three-member minority does not qualify for any seats on committees.

Such a split vote among three finance co-chairs is rare. In the meeting, Hoffman spoke against the CBR provision, citing the history of what the CBR was meant to be used for and that no minimum balance is required. Hoffman, who has served in the Legislature since the 1980s, has long been a powerful force in the Senate. It’s noteworthy that he publicly lost this vote.

Stedman spoke in favor of the committee substitute, citing the low CBR balance and the need for more revenues for long-term sustainability for the dividend and the budget.

The bill remains in the finance committee. If it is passed out it will end up in the rules committee. Unless there is a deal with the House, it is unlikely the bill will even come up for a vote in the Senate. Senator Bill Wielechowski (D – Anchorage), the chair of the rules committee, has long been a supporter of a larger dividend. As rules chair, he decided what bills go to the floor.

There are less than 30 days left in the session (constitutional limit). The division in the Senate on a dividend formula change, and the Republican-led House majority’s insistence on a 50/50 dividend, means a change this session is extremely unlikely. This will leave the statutory dividend formula in place, which has not been followed since 2016.

The amount of the dividend has crippled Legislature’s since former Governor Bill Walker reduced it in 2016 amid a multi-billion deficit. While the Senate and House majorities agree a full statutory dividend is unfeasible, there is no agreement on what a new formula would look like.