Week Ahead: Will a divided Legislature settle on a $3,000 dividend?

(Photo by House Majority Coalition)

Schedule for Special Session Day 5

10 a.m. – Senate technical floor session

1:30 p.m. – House Finance: HB 1001 education funding, SB 19 capital budget

3 p.m. – House floor session

5 p.m. House Finance: Public testimony on HB 1001

The dividend

Legislators are on their way back to Juneau today to get underway with the first full week of the first special session of the year. While agreement is all but in the bag on the crime bill and the operating budget, the elephant in the room is the deep divide over the dividend.

As it stands, there’s no consensus on the size of the dividend and no clear path toward agreement. Will it be $3,000? Something smaller? Will the law be changed for future years? Should the existing formula be put in the Alaska Constitution? How will the state pay for it?

The Anchorage Daily News published an excellent account over the weekend laying out where all the different factions currently stand, but this quote from Soldotna Republican Sen. Peter Micciche stands out:

“Whether or not they realize it, whether they pay it today, or they pay it on June 30, they’re paying a full dividend,” Micciche said.

That’s in reference to the matter that Gov. Michael J. Dunleavy has more or less pledged to veto the budget if it doesn’t include the dividend. The Alaska Legislature also faces an incredibly high barrier—45 total votes—to overriding any budget veto.

So it’s not just a matter of finding the 21 votes in the House and the 11 in the Senate to set a dividend amount, which has already proved to be a near-impossible task, but of finding the 45 that would support any figure not acceptable to the all-or-nothing demands of the governor.

Ultimately, the Legislature seems to be blocked in.

Or at least, the special session brings the consequences of the dividend into clearer focus.

We shouldn’t forget that it’s ultimately up to the Legislature to write the check for the dividend. The governor’s veto can bring legislators back to the table, but it can’t make a withdrawal.

If the Legislature ultimately refuses to pass a $3,000 dividend in its budget and the governor vetoes it, then Alaska will be without an operating budget with a little more than a month until the new fiscal year. Who’s going to be the first to blink as the state hurdles toward the brink of another statewide shutdown on July 1?

Or is the path of least resistance, which has been the Legislature’s favored path so far, going to win for another year? And if so, how are they going to pay for the roughly $1.9 billion needed for a dividend?

The Legislature has already settled on a budget with about $200 million in cuts, leaving about $700 million for the dividend according to the rules that legislators approved for spending out of the Alaska Permanent Fund’s Earnings Reserve Account.

With the budget near-finished in the conference committee, there’s little possibility to increase those cuts so the additional $1.2 billion that’s needed to reach a $3,000 dividend would need to come from the state’s savings.

It’ll ultimately come down to the Legislature’s ability to cobble together the funding for the dividend.

The easiest source come from the Alaska Permanent Fund Earnings Reserve Account, which can be tapped into with a majority vote of both chambers of the Legislature (21 in the House and 11 in the Senate). Such an unplanned draw should raise the alarm bells for legislators who spent most of last session talking about the importance sticking to their spending limit.

The spending rules were put into place to keep draws from the earnings reserve account stable and dependable in a world where oil revenue has slumped. It was a balancing act that could already be thrown out of balance.

The earnings reserve is the easiest account to tap into, but not the only one.

There’s also the constitutional budget reserve. It’s the beleaguered account that helped Alaska weather most of the years since the state’s oil revenue plummeted and it has about $2.3 billion left.

It can be tapped into with a three-quarter vote of both chambers, 30 in the House and 15 in the Senate (which just so happens to be the total votes needed to override a veto). So far, the Legislature has shied away from opening a debate on this issue, but a dividend—and adjournment—could bring it back to the table.

The Legislature could utilize a combination of the two accounts to reach the $1.2 billion needed to pay the dividend, but even bringing that to a vote could be a tall order.

No rush on the crime bill

When the Legislature adjourned on Thursday after rolling out a compromise on the crime bill, House Speaker Bryce Edgmon said the plan could be to take the legislation as early as today. The House is set to return at 3 p.m. today, but the Senate is likely to take its time.

Senate President Cathy Giessel told the Associated Press that in order for members to have the time to review the bill, she said she anticipates a final vote in the Senate after Memorial Day.

Giessel’s planning makes sense given the complexity of the legislation and the time required to update the fiscal notes for the legislation.

Between $500,000 and $1 million

That’s the estimated cost of the special session, according to a Friday report by KTUU. The wider-than-usual range is thanks to the Legislature’s failure to pass an operating budget by the end of the 121-day session.

Until legislators send a fully funded operating budget to the governor they can’t collect their per diem checks, which are $302 a day. With the three Juneau legislators ineligible to receive per diem, the total savings to the state is about $17,214 per day if all Legislators collected their special session per diem.

HB178 protest

Hundreds turned out for a protest of Rep. David Eastman’s Alabama-style anti-abortion bill House Bill 178 over the weekend. As the current Alaska Legislature stands, the legislation has no chance.

“We’re not going to give this bill the light of day because it doesn’t deserve the light of day,” Rep. Ivy Spohnholz told the crowd, according to an ADN report on the event. Spohnholz is the co-chair of the House Health and Social Services Committee, where the bill is currently assigned.

The legislation’s failure to exempt even rape and incest will also likely keep it from gaining broader traction in the Alaska Legislature, but don’t take that as a sign that anti-abortion legislation of any kind isn’t close to having the traction it needs in the Alaska Legislature. The Senate has two anti-abortion legislators in key positions: Senate President Cathy Giessel and Rules Committee Chair Sen. John Coghill.

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