There is a grand bargain that can be achieved for Alaska by our current government that will settle both the PFD and the state budget issues for decades to come. But in order to settle both of these big ticket items, the governor must get out of campaign mode and work across the aisle. There are two proposed constitutional amendments which together can, and should, be a part of a compromise between the governor and the legislature. The first constitutional amendment is SJR 2, which has been put forward by Senator Tom Begich.
This amendment does two things: First, it enshrines the POMV model of a 5.25% draw from the earnings reserve into the constitution. The second thing it does is guarantee dividends into perpetuity. If this amendment were to be enacted by voters, the dividend this year would come out to be roughly $1,500-$1,600. But over time, the dividends would grow larger so, in the long term, it would make up for the short term loss.
The second constitutional amendment needed, in addition to SJR 2, is SJR 6, which has been proposed by the governor and is a constitutional spending limit. This will limit the ability of future legislatures to go on a spending spree and bring the state back to the cliff of fiscal ruin. In conjunction with Senator Begich’s amendment, it will ensure sustainable funding for state government and dividends for generations to come. If the governor comes out in favor of both amendments and engages with legislative leadership, some important things can happen.
First, the leadership in both bodies (with support from the governor) can make the amendments a legislative package where members have to vote for both. The House Coalition members will vote for the package because it ensures funding for government services into the future. The House Minority caucus will vote for it because it will restrain government spending into the future. In the Senate the same thing will happen, as the budget hawks and the government revenue factions will come together to get something they both want. Such an arrangement is a win across the board for everyone, and is good public policy that will bring an end to the constant debates around the state budget. This plan could be on the special session call that the governor has put out and he would have a shot of coming out of it as the victor.
As it stands now the governor has committed himself to a path that will end in defeat for his administration. There is no three thousand dollar dividend that is going to pass a special session this year or next. The governor is pounding his fist on the table with the expectation that the legislature will bend to his will. That is a mistake on his part, and he needs to put away the campaign rhetoric and engage with leadership in both bodies to find a way forward that all sides can live with. If he does not do this then he will burn bridges with the legislative leadership that he will not be able to mend.
And that will affect not just what he is pushing on these issues, but also will keep his broader legislative agenda from going forward. The legislative process, at its heart, is about good government and making good public policy decisions, not about election campaigns. When it becomes only about campaigns, there is a loss in the process, and that loss is good public policy that the state really needs. Hopefully leaders in both bodies will see the merits of this approach, and will move quickly on a deal that can succeed.