Alaska Senate Votes to Use Permanent Fund Earnings for Government Over Valley Senators' Objection

A bill that would impact how Alaskans receive Permanent Fund Dividends passed the Alaska Senate on Wednesday over the objection of Democrats and a handful of Republicans, including Senator Mike Dunleavy.

Senate Bill 26 would use part of the Permanent Fund Earnings to fund state government. Proponents of the bill say it will significantly close the state’s current budget gap. That would result in smaller Permanent Fund Dividend checks for qualifying Alaskans.

For the past few years, the State of Alaska has drawn on the Statutory and Constitutional Budget Reserve accounts in order to fund annual operating budgets. The statutory reserve has been all but depleted, and the constitutional reserve has significantly diminished in that time. Once those reserve accounts are exhausted, the Permanent Fund’s earnings could be the next place legislators look, which could endanger the PFD in its entirety. By beginning to use the earnings now and shrinking PFDs, those in favor of SB 26 hope to extend the life of the other reserve accounts.

Democrats opposing the bill say that SB 26 would disproportionately impact poorer Alaskans, who rely more heavily on the PFD as part of their annual income. For a family with children, the impact could be thousands of dollars per year.

Senator Mike Dunleavy, the Wasilla Republican whose district includes the Upper Valley, along with fellow Valley republicans Shelley Huges and David Wilson, all voted against final passage of the bill. Before the final vote, Senator Dunleavy attempted to amend SB 26 to restore the full amount of last year’s Permanent Fund Dividend. A veto by Governor Bill Walker reduced PFDs statewide by about $1,000 last year.

Prior to and during the current session, Dunleavy has tried a number of tactics to restore last year’s dividend to its full amount. Those attempts, as well as his desire to continue the current PFD funding model, place him on the side of the Democratic Senate Minority. The Senate Majority moved to table Dunleavy’s amendment rather than vote on it as a substantive issue. Caucus rules for the majority require members to vote as one on procedural issues. Thus, Senator Dunleavy was effectively forced to vote against his own amendment.

In final discussion of SB 26, Senator Dunleavy once again stated that he believes more cuts are necessary to state government, and that the draw from the earning’s reserve proposed by the bill is too large.

Senate Bill 26 ultimately passed by a vote of 12 to 8.