A state House committee kicked off a new round of public hearings on the Permanent Fund Dividend and the state budget last Monday in Anchorage that continued Tuesday in Wasilla, Wednesday in Fairbanks and in Juneau on Thursday.
In the Anchorage meeting, both sides weighed with, on one hand, impassioned defenses for Gov. Mike Dunleavy’s $3,000 PFD proposal, and on the other hand for a more modest dividend that would leave more money for public services.
Meanwhile, the bill before the House Finance Committee on Monday was a new version of House Bill 2001. The bill had been introduced originally as a simple appropriation for a $1,600 PFD but it morphed Monday into a comprehensive “omnibus” budget with measures added to restore virtually all of Dunleavy’s vetoes as well as a state capital, or construction, budget.
In another development Monday, the University of Alaska’s Board of Regents met, but postponed until July 30 a planned vote on a declaration of financial exigency (emergency), and options for restructuring the university.
The governor vetoed a big portion of funds appropriated for the university, essentially restoring a 41 percent cut to UA’s state funding Dunleavy proposed last February.
The regents voted 10-1 on Monday to postpone the financial exigency decision, a step that would give UA president Jim Johnsen the authority to take emergency steps including terminating faculty and staff and closing campuses.
The regents decided to hold an emergency board meeting July 22 to continue the discussion. Johnsen had wanted direction from the regents on restructuring so that planning could get underway.
Now the planning is delayed a month, which also means efforts to reduce costs may be delayed. If the Legislature and governor cannot reach agreement on restoring all or some of the $131 million cut from the budget, which seems problematic at this point — and there are delays in reducing spending — the university may run out of cash in early spring according to projections presented to the regents on Monday.
Meanwhile, on the divisive PFD issue, House Finance co-chair Rep. Neal Foster, D-Nome, said the new committee substitute for HB 2001 does not appropriate a specific amount for dividends but leaves a surplus amount that would work out to an approximate $929 PFD.
Foster said the committee bill is still a “work in progress” amid ongoing negotiations, so the $929 figure is not final.
Meanwhile, the sharp division among Alaskans over a larger or smaller dividend was on full display in the Anchorage meeting.
Supporters of the governor’s approach for a large PFD channeled the late Gov. Jay Hammond’s vision of the dividend as a widely-shared benefit that would make citizens vigilant against “special interests” raiding the Permanent Fund.
Educators and public employees were cited as special interests.
A University of Alaska Anchorage professor, speaking for herself, said the PFD debate has thrown a spotlight on Alaskans who believe government can benefit the young and needy and others who see government as a problem. In this view, government should have no other purpose than distributing dividends, she said.
The speaker said she was raised in a family with modest income and that state assistance and other support, including PFDs, helped her get an education and launch a career.
Several speakers, supporting Dunleavy’s dividend, said the PFD helped them with basic needs. One cited her family’s experience in being hit hard in the recent recession, and that the annual check helped install a water system in a bare-bones cabin one year; a boiler to replace a wood stove the following year, and that the family was counting on the $3,000 this year to help provide winter shelter for a relative who will likely be homeless without it.
Other speakers criticized Dunleavy’s $400 million-plus vetoes arguing it would create a “permanent recession” through the loss of over 4,000 jobs, and that the governor’s belief that Alaska can “cut its way” to prosperity has no foundation in economic logic or experience.
Support for the governor’s “flamethrower” policies by out-of-state conservative groups was also cited. “Dunleavy reports directly to the Koch Brothers rather than Alaskans,” one person commented.
Another critic of the vetoes said drastic cuts to social service programs will cause an increase in crime, sexual assault and homelessness. Shelter capacity is already being shuttered.
“Where do they expect these people to go?” the critic asked.
“No amount of PFD will offset the destruction caused by these (budget cuts),” another person said.
Several defenders of the governor’s dividend cited a belief that people have, or should have, an entitlement to a direct share of the oil, and that the reductions of the PFD by former Gov. Bill Walker and legislators in 2017 and 2018 below the amount that would be paid under a formula in state law amounted to a theft of a property right.
One person said the people had “voted” to approve the PFD and should vote on any changes. This is incorrect, however. The Permanent Fund itself was created in 1976 when people voted for a constitutional amendment, but the dividend was created by the Legislature in state law five years later.
The new version of HB 2001 enacts a number of other budget changes to undo most of what the governor has done recently through vetoes or fund transfers. State assistance for school bond debt service, for example, is fully-funded in the new bill, where Dunleavy had vetoed half of the funds.
This action directly affects the Matanuska-Susitna Borough and the Municipality of Anchorage, both which have substantial debt for school construction. Without the restored funding property taxes will go up in both Anchorage and the Mat-Su.
The bill would also fully fund the state’s capital budget for FY 2020, which has not yet been done by the Legislature. Unless this happens in July, the state’s share of federal transportation funds, which amounts to several hundred million dollars, will be at risk.
In context, the changes in HB 2001 should be viewed as part of the negotiations underway between the Legislature and the governor. For one thing, it’s not clear that the Senate will buy off on all of the House Finance Committee changes to HB 2001.
Also, if the bill passes in the two weeks remaining in the special session, Dunleavy may well exercise major vetoes again.
However, public pressure is building on Republican lawmakers who failed to support an effort to override vote on the vetoes. A second veto override vote could bring a different result.
Also, one card that legislators hold is that, as yet, there is no appropriation for the PFD in the budget bill. HB 2001 leaves money for the dividend but does not actually make the appropriation.
Dunleavy is powerless in this area, as only the Legislature can make the appropriation for the dividend.
If the two sides do not come together, 2019 may wind up being the year without the PFD.