Juneau lawmakers have taken the first steps to address structural budget problems in the state and the Permanent Fund (PFD) dividend.
On Wednesday, the Senate Judiciary Committee moved bills to change the PFD funding formula to the so-called “50-50” plan, with the annual payment to the state from the revenues of the Permanent Fund balanced between budget support and dividend funding is divided.
In addition, three bills were introduced to generate new revenue. Two would raise taxes on the oil and gas industry, while a third would waive a nationwide sales tax.
The change in funding for the PFD in the Senate depends on lawmakers also approving a constitutional amendment for the PFD, bringing in $ 160 million in new revenue, and other elements of a bipartisan working group to be introduced several weeks before the start of Aug. 16 the special legislation now underway met for a long time.
Most legislators believe that it is high time to find a long-term solution to the PFD problem. Most lawmakers and the governor want to clear the matter up because it takes too much time and attention away from other state affairs.
Senator Shelley Hughes, R-Mat-Su, the Senate Majority Leader, aired her frustration in a recent briefing to Commonwealth North, an Anchorage corporate group focused on public policy.
Hughes said her government education initiative efforts, along with Senator Tom Begich, D-Anch., The Senate minority leader, were hampered because the dividend attracted so much attention. Hughes also wants to work on sex trafficking laws, but there’s little time to do that either.
The State House is now also postponing bills. The House of Representatives passed a revised budget on Tuesday, August 31st, setting the dividend at $ 1,100, despite the vote being controversial.
There is still a catch to HB 3003, the bill that has been passed. About half of the dividend is financed from state funds, the rest from the Statutory Budget Reserve or SBR, a savings account.
However, the question arises as to whether there is enough money left in the SBR to pay out the dividends. There has been a complex series of budget maneuvers, including vetoes by the governor, with the end result that there is still uncertainty about the status of the funds in the account.
If there is no SBR money available, there is enough general fund support for a PFD of $ 600.
HB 3003 is now in the state Senate and Senators will have their own views on the dividend and how it is funded. In late June, the Senate and House of Representatives approved a dividend of $ 1,100, but that bill required a withdrawal from the Constitutional Budget Reserve, a reserve account other than the SBR that is now considered a PFD fund source.
The difference between the two is that accepting funds from the CBR requires a three-quarter legislative vote, requiring 30 of the state’s 40 MPs. In late June, the 19-member Republican minority in the House of Representatives blocked the use of the CBR to get the Democratic-led majority in the House of Representatives to consider the governor’s 50-50 plan and its constitutional amendments.
For the SBR to withdraw, all that is needed is a majority of MPs, i.e. 21. There were enough votes for this on Tuesday, albeit hardly any. There were razor-sharp votes in the House of Representatives on amendments raising the PFD when HB 3003 was passed last Tuesday, August 31st.
Governor Mike Dunleavy will also interfere. In early July, he vetoed a $ 525 PFD, the amount of general funding left after the House minority blocked the CBR as a source of funds.
Dunleavy could veto again, which would either mean no dividend will be paid this year or the governor withdraws the legislature for a fourth special session after the current one ends on September 15.
What has been captivating things is that people have different ideas about a big bargain on the dividend issue. The governor’s idea is a constitutional change in HJR 6 (the House of Representatives version) and SJR 7 (the Senate version) that would constitutionally guarantee a PFD along with its funding using the new 50-50 funding formula.
However, there is sharp disagreement as to whether it is appropriate to include a spending program and amount in the constitution. The legislature now directs all expenditure through approval calculations.
However, the disagreements on this issue are so great that some believe that the only way to really resolve it is to include the PFD in the constitution.
The governor’s plan is one of many ideas tossed around, and most, including Dunlevy’s plan, would create budget deficits and require new revenue.
To this end, the first income statements were presented to the House of Representatives on Monday, August 30th. One of them is a bill that changes the state oil and gas production tax and increases the minimum tax North Slope producers pay to generate more revenue. Another enacts a nationwide sales tax of 2 percent.
House Bill 3005, the oil tax, was introduced by Rep. Geron Tarr, D-Anch. with representative Harriet Drummond, D-Anch. as a co-sponsor. HB 3006, the sales tax, was introduced by the House Ways and Means Committee.
A revenue bill was also passed in the Senate that would indirectly increase mineral oil taxes as well as state fuel taxes. Senators Tom Begich of Anchorage; Elvi Gray-Jackson, also from Anchorage, and Donny Olson from Golovin, near Nome, supported the bill. All are democrats.
Senate Bill 3002 will raise fuel tax from $ 0.08 per gallon – the lowest in the country – to $ 0.16 per gallon, which would then rank Alaska 43rd in the nation for its fuel tax, Begich said.
The bill would also reduce the oil and gas tax credit per barrel from $ 8 to $ 5 and amend state corporate tax law by adding a tax at the state corporate tax rate of 9.4 to corporations organized as “S” companies Ordinary “C” society has to pay percent. Only one major oil producer in Alaska – Hilcorp Energy – is an S corporation. The other big producers are C-corporations.
Taken together, these revenue measures would raise about $ 250 million for the state over the next year, Begich said. Given that no Republican has submitted an income statement, not the governor, its future seems uncertain.