After a day filled with twists and turns, the House Finance Committee voted down a plan to pay out a bigger PFD by overspending the Alaska Permanent Fund not once but twice.
The proposal — by House Finance Committee co-chair Rep. Neal Foster — would have paid a dividend based on the long-ignored state law, bypassing the 2018 law that sets limits on spending from the Alaska Permanent Fund. This would have resulted in a PFD exceeding $3,000, at the cost of approximately $800 million from the fund.
When the amendment was first proposed on Wednesday, it appeared that it was headed toward passage. All but one Republican on the committee voiced support for the plan despite a general acknowledgment of the long-term financial risk. Some argued that overspending the account would force larger conversations about the state’s fiscal plan.
Fairbanks Republican Rep. Will Stapp was the only Republican who opposed the plan at the time. He noted fund managers are already worried the Alaska Permanent Fund may run out of spendable cash under the status quo spending, let alone with a large ad hoc draw.
“In order to pay a statutory dividend, this state either has to reduce its expenditures on government or tax people. Those are your two options. You have no other options,” he said after proposing an amendment that would have eliminated the entirety of Alaska’s criminal justice system to show that it wouldn’t even come close to covering the PFD. “I believe the scope of the government can absolutely be reduced. I don’t believe you can cut a billion dollars out of it. I don’t believe you can cut $801 million out of it because you would have catastrophic consequences.”
But things looked like a done deal when House Finance Committee co-chair Rep. Bryce Edgmon, I-Dillingham, said that he wouldn’t stand in the way of the PFD diehards any longer.
“I couldn’t think of a more irresponsible vote I could take,” he said. “But you know what? I’m going to help you guys catch the car. I’m going to vote yes, and we’re going to see where this is going to go.”
It was a twist that seemed to catch everyone, including the PFD diehards, by surprise. Edgmon, a progressive moderate, has long been the voice of restraint regarding the dividend and the state’s savings accounts. It appeared the expectation was that he would block the plan from moving forward, allowing full PFD supporters to show their support without actually pushing the state closer to financial peril.
That prompted a break on Wednesday night before the amendment could be voted on, and when legislators returned on Thursday, things had changed significantly.
Instead of swiftly taking a vote on what had appeared to be a sure thing the night before, the committee approved an amendment that switched the source of the funding from the Alaska Permanent Fund’s earnings reserve account to the Constitutional Budget Reserve.
The move wasn’t supported by pro-PFD Republicans, who argued that it was just a backdoor way to stop them from approving a larger dividend because the CBR requires a supermajority vote to tap. But they didn’t have enough votes to block the change after House Minority Democrats and independents joined Reps. Edgmon and Foster to make the switch.
Following the change, House Finance Committee co-chair Rep. DeLena Johnson, R-Palmer, said she couldn’t support the plan to pay a full dividend any longer, calling the change in funding source dishonest.
“If I thought this was an honest attempt to pay Alaskans a full PFD, I would be in full support of this amendment. Is this an honest attempt to pay Alaskans a full PFD? We just did a CBR draw that now requires a three-quarter vote to pay that full PFD,” she said. “I’m pretty sure people realize, is there a three-quarter vote to pass that full PFD? Probably not, and it probably allows this not to be passed, but I’m just putting that out there.”
Rep. Edgmon said that a three-quarters vote should be required on such a monumental decision that would throw the state’s financial future into uncertainty.
The amendment to pay a full PFD out of the Constitutional Budget Reserve failed 3Y-8N, which would have been the end of it until a usual move at the end of the day.
As the committee was closing up its work for the day, legislators moved to rescind action on the fund source switch, moving the funding away from the CBR and back to the Alaska Permanent Fund’s earnings reserve account.
Republicans had what they had claimed just hours before was the honest way to fund a full PFD, but it seemed like they had grown cold feet.
After a tense exchange about the procedural mechanics of the vote, many Republicans — including Rep. Johnson — voted against the amendment to pay the PFD out of the Alaska Permanent Fund’s earnings reserve account.
Only Rep. Foster and Republican Reps. Mike Cronk and Frank Tomaszewski voted in favor of the amendment.
The House Finance Committee still has about 80 budget amendments remaining to consider when lawmakers return from the Easter break on Monday. The budget is expected to head to the House floor next month, where additional changes can still be made before it’s sent to the Senate.
Matt Acuña Buxton is a long-time political reporter who has written for the Fairbanks Daily News-Miner and The Midnight Sun political blog. He also authors the daily politics newsletter, The Alaska Memo, and can frequently be found live-tweeting public meetings on Twitter.
