Legislature sends bill with $1,600 dividend and reversal of most budget vetoes to Dunleavy’s desk

JUNEAU — The Alaska Legislature on Monday voted to approve legislation that would pay a $1,600 Permanent Fund dividend and reverse most of the $444 million vetoed by Gov. Mike Dunleavy in June from the state’s operating budget.

The measure now goes to the governor for approval or veto.

“It’ll be on his hands to determine what future he wants for Alaska,” said Senate Minority Leader Tom Begich, D-Anchorage.

The Alaska Senate approved House Bill 2001 17-1 on Monday afternoon. The Alaska House subsequently voted 23-15 to approve the Senate’s changes to the bill. The House vote was almost precisely along caucus lines, with the coalition majority in favor and the Republican minority, plus Republican Rep. Gabrielle LeDoux, R-Anchorage, opposed.

In a call with reporters, the governor did not explicitly state whether he will sign the bill, but his initial impression of the legislation was not a positive one.

“I think it’s a dark day for the PFD and for Alaskans that support the PFD,” Dunleavy said. “And for those that are looking at a sustainable budget, these add-backs take us in the other direction, and the idea that just by taking the PFD everything is going to be fine going forward, I think, is an illusion.”

The Legislature and governor have been working on four major fiscal challenges in the ongoing special session: the capital budget, the reverse sweep, the amount of this year’s Permanent Fund dividend and the governor’s decision to veto $444 million from the state operating budget. The first two issues were the domain of separate legislation that also passed the Legislature on Monday. The second two issues were dealt with in HB 2001.

With all four topics addressed, the Republican House minority attempted to adjourn the special session Monday evening. The coalition House majority turned that request down for the time being. If lawmakers do not adjourn early, the special session is scheduled to expire Aug. 6.

The governor has 15 days to sign the bill once it is sent to his office. If the Legislature adjourns the special session before the bill is transmitted, he has 20 days to sign it.

The governor said earlier this year that he would veto a $1,600 dividend in a separate piece of legislation, and in a conversation with reporters last week, the governor told reporters that he has not changed his support for a $3,000 dividend.

Rep. John Lincoln, D-Kotzebue, said after the governor’s press conference that if the governor vetoes the $1,600 dividend, there might be no dividend at all this year. The House majority, of which Lincoln is a member, has been adamant in its support for a “sustainable” dividend that does not require violating a Permanent Fund spending cap signed into law last year.

The conflict between the governor’s position and the one held by a majority of lawmakers led Rep. DeLena Johnson, R-Palmer, to say last week that she worries about the possibility of a “dividend vacation.”

The governor himself raised that possibility in his call with reporters.

“I think the people of Alaska, they need to be prepared for a smaller dividend or one that disappears completely,” he said.

“No. I can tell you the Senate absolutely would not agree to that,” Senate President Cathy Giessel, R-Anchorage, said when asked whether she thinks the dividend would stop in the event of a veto.

As for a delay, she said, “I don’t know.”

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According to documents from the House Finance Committee and the text of amendments passed Monday on the Senate floor, HB 2001 would reverse all but $23.29 million of those vetoes.

“We’re here because the governor precipitated a crisis, and in that crisis, he forced people to make decisions about what their future will be,” Begich said of the governor’s vetoes.

He referenced protests across the state and what he described as thousands of emails, phone calls and sessions of public testimony in favor of reversing the vetoes.

“The evidence is that people want their services,” he said.

Much of the remaining $23.29 million cut would be from the University of Alaska, whose $130 million budget veto under Dunleavy would shrink to $20 million. An additional $5 million in state funding to the university system was cut previously by the Legislature.

“That’s still not going to take away from the fact that there are people in Fairbanks … trying to figure out if they’ve got a job tomorrow,” said Sen. Chris Birch, R-Anchorage, speaking about the cut to the university.

The remaining vetoes sustained by the Legislature predominantly deal with cuts to the travel budgets of state agencies.

Sen. Elvi Gray-Jackson, D-Anchorage, successfully introduced an amendment that reversed the governor’s veto of school-bond debt reimbursements to cities and boroughs. Municipalities across the state had warned they may have to increase property taxes to compensate for that veto.

Sen. Donny Olson, D-Golovin, introduced an amendment reversing a veto for rural school construction and maintenance. Both amendments were adopted by the Senate unanimously.

Speaking to reporters, Dunleavy incorrectly stated that the difference between the $1,600 dividend proposed by the Legislature and the $3,000 dividend he supports is “being used to grow government.”

According to preliminary figures from the Legislative Finance Division, the state’s operating budget is nearly $93 million smaller than it was last year, following significant cuts by the Legislature and the remaining vetoes. Even if the governor’s vetoes are fully accepted, there is not sufficient money to fund both government services and a $3,000 dividend without spending from savings or violating last year’s Permanent Fund spending cap.

“We have an unsustainable budget,” the governor said. “Our attempt was to get a sustainable budget through reductions.”

While he said he does not yet know how many of the veto reversals he will veto, “I would anticipate that there will be reductions. How much and in what order, what categories, what services, that’s to be determined. But again the idea behind this is not, quote, to harm Alaska.”

Sens. Shelley Hughes, R-Palmer, and Mike Shower, R-Wasilla, did not participate in the final Senate vote and votes on amendments reversing items vetoed by the governor. They entered the Senate chambers to cast votes in favor of a $3,000 dividend, then left the chambers.

Sen. Lora Reinbold, R-Eagle River, voted no in the final tally. The final vote was binding among members of the 14-person Senate majority, and Reinbold acknowledged that she may lose her position as chairwoman of the Senate Labor and Commerce Committee for her dissent.

Giessel said Monday evening that “there’s no change at this point" in the makeup of the Senate majority.

How they voted

The following votes indicate how senators voted on the final version of House Bill 2001 and how members of the House voted when asked whether they agreed with the changes made in the Senate. “Yes” votes were in favor of a $1,600 dividend and the reversal of most Dunleavy budget cuts. “No” votes in the House would have sent the bill to a conference committee. “No” votes in the Senate would have killed the bill.

HOUSE

Yes votes: Speaker of the House Bryce Edgmon, I-Dillingham; House Majority Leader Steve Thompson, R-Fairbanks; Rep. Matt Claman, D-Anchorage; Rep. Harriet Drummond, D-Anchorage; Rep. Zack Fields, D-Anchorage; Rep. Neal Foster, D-Nome; Rep. Sara Hannan, D-Juneau; Rep. Grier Hopkins, D-Fairbanks; Rep. Jennifer Johnston, R-Anchorage; Rep. Andy Josephson, D-Anchorage; Rep. Gary Knopp, R-Kenai; Rep. Chuck Kopp, R-Anchorage; Rep. Jonathan Kreiss-Tomkins, D-Sitka; Rep. Bart LeBon, R-Fairbanks; Rep. John Lincoln, D-Kotzebue; Rep. Dan Ortiz, I-Ketchikan; Rep. Ivy Spohnholz, D-Anchorage; Rep. Andi Story, D-Juneau; Rep. Louise Stutes, R-Kodiak; Rep. Geran Tarr, D-Anchorage; Rep. Chris Tuck, D-Anchorage; Rep. Adam Wool, D-Fairbanks; Rep. Tiffany Zulkosky, D-Bethel.

No votes: House Minority Leader Lance Pruitt, R-Anchorage; Rep. David Eastman, R-Wasilla; Rep. Sharon Jackson, R-Eagle River; Rep. DeLena Johnson, R-Palmer; Rep. Gabrielle LeDoux, R-Anchorage; Rep. Kelly Merrick, R-Eagle River; Rep. Sara Rasmussen, R-Anchorage; Rep. George Rauscher, R-Sutton; Rep. Josh Revak, R-Anchorage; Rep. Laddie Shaw, R-Anchorage; Rep. Colleen Sullivan-Leonard, R-Wasilla; Rep. Dave Talerico, R-Healy; Rep. Cathy Tilton, R-Wasilla; Rep. Sarah Vance, R-Homer; Rep. Tammie Wilson, R-North Pole.

Excused absent: Rep. Ben Carpenter, R-Nikiski; Rep. Mark Neuman, R-Big Lake

SENATE

Yes votes: Senate President Cathy Giessel, R-Anchorage; Senate Minority Leader Tom Begich, D-Anchorage; Sen. Chris Birch, R-Anchorage; Sen. Click Bishop, R-Fairbanks; Sen. John Coghill, R-North Pole; Sen. Mia Costello, R-Anchorage; Sen. Elvi Gray-Jackson, D-Anchorage; Senate Majority Leader Lyman Hoffman, D-Bethel; Sen. Scott Kawasaki, D-Fairbanks; Sen. Jesse Kiehl, D-Juneau; Sen. Peter Micciche, R-Soldotna; Sen. Donny Olson, D-Golovin; Sen. Bert Stedman, R-Sitka; Sen. Gary Stevens, R-Kodiak; Sen. Natasha von Imhof, R-Anchorage; Sen. Bill Wielechowski, D-Anchorage; Sen. David Wilson, R-Wasilla.

No votes: Sen. Lora Reinbold, R-Eagle River.

Excused absent: Sen. Shelley Hughes, R-Palmer; Sen. Mike Shower, R-Wasilla.