House coalition agreement likely kills Dunleavy’s supersized Permanent Fund dividend

JUNEAU — The agreement that created a new coalition majority in the Alaska House of Representatives may prevent passage of Gov. Mike Dunleavy’s plan to repay vetoed and cut portions of past Permanent Fund dividends.

The governor has proposed legislation that would pay $3,678 to eligible Alaskans over three years. Those payments — $1,061 this year, $1,289 next year and $1,328 in 2021 — would come in addition to the regular Permanent Fund dividend. This year, according to calculations in state law, that regular dividend is expected to be between $2,900 and $3,000.

Though the proposal was a priority of Dunleavy’s during his 2018 election campaign, the supersized payments would require $2.3 billion of additional spending from the Alaska Permanent Fund, and leaders of the House of Representatives’ new majority say they are unwilling to spend that money.

“It would be very unlikely that that would be a priority for the House to address,” House Rules Chairman Chuck Kopp, R-Anchorage, said about the governor’s PFD payback plan.

When the 25-member House majority organized earlier this month, members agreed to a binding caucus. That means each member is required to follow certain rules.

House Majority Leader Steve Thompson, R-Fairbanks, said there are two main rules: Each member of the majority is required to vote yes on the final version of the state budget, and each member is required to vote to uphold a ruling of the speaker of the House if he finds a member is out of order.

In addition, members of the majority agreed on limits to the budget: The budget approved by the House cannot spend from savings and cannot spend more from the Permanent Fund than allowed by Senate Bill 26.

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That bill, approved by lawmakers last year, sets rules for how much money can be spent from the Permanent Fund on dividends and general government expenses combined. This year’s limit is $2.9 billion.

“It’s a huge change,” said Sen. Tammie Wilson, R-North Pole and a co-chair of the House Finance Committee. “This is the first time we’ve ever said the budget has to fall within this premise.”

When introducing his PFD payback legislation, the governor said he would go above the Senate Bill 26 limit.

Does that mean the governor’s proposal is a nonstarter in the House?

“That would be above the draw on the earnings reserve, yes,” Thompson said.

Rep. Jennifer Johnston, R-Anchorage and vice chair of the House Finance Committee, agreed.

“No, it’s not going to happen,” she said of the governor’s proposal.

Dunleavy press secretary Matt Shuckerow said the coalition’s position appears to leave the door open for a state tax.

“The House majority appears to be organized around the principles of new taxes and once again taking the PFD to pay for government. We hope that’s not the case. Alaskans overwhelmingly rejected those ideas last November and will do so again,” Shuckerow said.

Wilson interprets the coalition agreement differently from Johnston, Kopp and Thompson. Because the governor’s PFD payback plan isn’t yet part of the budget and is in separate legislation, House lawmakers could vote for it without breaking the agreement.

That forestalls, but doesn’t eliminate, the problem for House lawmakers. They would still have to figure out how to pay for the super-sized PFD without violating their own rules.

“That is going to be a discussion on where that money comes from,” Wilson said of potential House debates about the governor’s proposal.

Thompson agreed that Wilson’s interpretation of the agreement creates a narrow path for the governor’s PFD payback legislation to advance.

“Very narrow,” he said.

Legislators in the House and Senate are already seeking ways to reverse the governor’s proposed cuts to education and other state services. Finding money for a super-sized dividend while remaining within strict spending limits is a long shot, to say the least.

Members of the coalition aren’t willing to say it’s completely impossible. The governor’s PFD payback proposal will have a public hearing Thursday in the Senate State Affairs Committee. Public testimony will be taken beginning at 6 p.m.

“At this point, I’m not going to say anything’s off the table,” said House Speaker Bryce Edgmon, I-Dillingham. “I think there’s a lot of discussion that needs to take place between the House and Senate and the governor.”