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Alaska lawmakers open special session on budget, dividends

JUNEAU, Alaska (AP) — Alaska lawmakers convened in special session Thursday, with completion of the budget a top priority.

Perhaps the biggest challenge in reaching a compromise will be deciding what size check to pay residents this year from the state’s oil-wealth fund, known as the Alaska Permanent Fund.

The Senate in the version of the budget it debated and passed on the last day of the regular session Wednesday proposed a check estimated to be around $2,300, in line with a 50/50 split between what is drawn from permanent fund earnings for government and for dividend checks. Some lawmakers have shown an interest in such a split as part of a separate, ongoing debate over possible changes to the dividend program.

The House did not include a dividend amount for this year in its version of the budget. The version of the budget that advanced from the Senate’s budget-writing committee had proposed a $1,000 dividend.

A committee of House and Senate negotiators was set up to hash out differences between the House and Senate versions of the budget and held an organizational meeting Thursday. The Capitol was relatively quiet following a flurry of activity the day before.

The dividend has become a politically divisive issue. A long-standing formula for calculating checks was last used in 2015 as the state wrestled with deficits, an ongoing issue. In 2018, lawmakers began using permanent fund earnings, typically used to pay dividends, to also help cover government expenses. They also sought to limit what could be withdrawn for both, setting up bitter fights over how to split the money.

Rep. Neal Foster, the co-chair of the House Finance Committee, said members of the bipartisan coalition he belongs to don’t want to exceed the withdrawal amount of about $3.1 billion for the budget year under debate. The Senate proposal would do that.

The Nome Democrat said his colleagues realize the need for some “give and take” with the Senate. But the caucus hasn’t yet discussed “how far we end up going,” Foster said.

The Senate, as part of its debate Wednesday, defeated a proposal that called for paying a dividend under the formula that hasn’t been used in several years and would have resulted in checks in the $3,000 range.

Senate President Peter Micciche said he didn’t support it because “I felt like it’s being disingenuous with Alaskans that may still be hoping that that’s actually going to occur. It’s not.”

Micciche, a Soldotna Republican, said he thinks a 50/50 split is realistic. But he said it would leave a deficit lawmakers would need to figure out how to fill. Lawmakers cannot overdraw from earnings “as a habit,” he said.

He has discussed ideas such as a sales tax and adjustments to Alaska’s oil tax structure as part of a broader fiscal package.

He said action on the state’s fiscal situation is needed this year.

Besides the budget, the special session agenda set by Dunleavy includes his proposed constitutional amendment that would restructure the permanent fund, rolling its spendable earnings reserve into the fund’s protected principal, and set a draw limit, with half the draw going toward dividends.

The proposal would need two-thirds support in each the House and Senate to get on the November 2022 ballot.

Legislative leaders on Thursday indicated lawmakers are not ready to make a decision on that proposal in the current special session. Dunleavy has called a second special session, for Aug. 2, to discuss revenue and proposed constitutional amendments on spending and taxes.

Micciche said he expected work to continue ahead of the August special session, informally and through committees, with the hopes of laying the groundwork for a comprehensive approach to the dividend and state fiscal situation that could be considered.

Becky Bohrer, The Associated Press