A new bill introduced by the House Finance Committee on Wednesday would piece together funding for one last dividend under the historical formula. The $3,000 dividend would only be paid, however, if the Legislature lowers the formula for future years.
House Bill 1005 by the House Finance Committee would fund the dividend with an additional draw out of the Alaska Permanent Fund’s earnings reserve account and a $500 million withdrawal from the Constitutional Budget Reserve, which requires a three-quarter vote in both chambers (30 in the House and 15 in the Senate).
It also has contingency language that would require the Legislature to also pass a bill reducing future dividends to about half of the current formula. It’s not a new idea. The Senate also proposed earlier this session before balking at bringing it to the Senate floor.
Rep. Tammie Wilson, the North Pole Republican who co-chairs the House Finance Committee, told the Anchorage Daily News that under the legislation’s contingency language next year’s dividend would be about $1,500 and grow from there.
“This bill is tied together. You don’t get a full dividend without changing the formula,” Wilson told reporters. “One does not happen without the other.”
The price tag on a $3,000 dividend is roughly $1.9 billion to the state and as it currently stands the budget puts roughly $700 million to the dividend while balancing the budget with oil revenues and the structured draw from the Alaska Permanent Fund.
The unstructured draw from the Alaska Permanent Fund’s earnings reserve account, which officials have warned against because it could undercut the stability of the fund, would come to about $700 million. The Constitutional Budget Reserve would bring the final piece of the funding to the table, but would require votes from the minority House Republicans.
House officials told media on Wednesday that the legislation is far from a done deal and the roll out is intended to gauge interest and support for the concept.
The House Finance Committee will get underway with the legislation today.
The committee is set to take public testimony on the bill at its 9 a.m. hearing with another hearing scheduled for 1:30 p.m.
Other than holding one hearing on the governor’s proposed education legislation and holding technical sessions, the Senate has not been active this week.
The Senate proposal to change the PFD formula would set dividends higher by splitting the annual structured draw from the earnings reserve account a 50-50 between dividends and state services. It would have a roughly $2,300 dividend in the following year as well as a $800 million gap in the budget.