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Big items left as Alaska lawmakers face adjournment deadline

Big items left as Alaska lawmakers face adjournment deadline
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JUNEAU, Alaska - The Alaska Legislature faced a Wednesday deadline to complete its work on state spending plans and a crime package.It also had yet to decide how to handle the dividend paid to residents from the state’s oil-wealth fund.

Heading into the day, House and Senate negotiators had nearly reached agreement on a state operating budget that shuns the level of cuts proposed by Republican Gov. Mike Dunleavy to areas like the university system and ferry system. But a decision remained on the divisive issue of what to do about the Alaska Permanent Fund dividend. An option that had been raised was to handle the dividend separately from the budget.

Dunleavy, speaking with reporters Wednesday morning, made clear his expectation that residents receive a full dividend from Alaska Permanent Fund earnings after three years of capped payouts.

“We will use all the tools available to us to make sure that that law is followed,” said Dunleavy, who has veto powers and the ability to call special sessions.

Senate President Cathy Giessel said members are thinking about what Dunleavy wants for the dividend and how to do that but also what the dividend program could look like going forward.

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“There’s only so much money, and we’re trying to figure out how best to share the wealth with citizens,” the Anchorage Republican said. “It is something that has been a legacy in this state, and we don’t want it to be something that cripples the state and the ability to provide services.”

She said the goal remained to try to settle the major outstanding issues by the end of the night. “I don’t know that they’ll all be achievable,” she said.

The Senate, in its version of the budget, proposed a full dividend payout, which would equate to checks estimated to be around $3,000 each and cost $1.9 billion. But that proposal left a $1.2 billion deficit that would need to be filled. The House didn’t address the dividend in its version of the budget.

The dividend calculation has not been followed the last three years amid ongoing debate over a persistent budget deficit. Lawmakers who agree with Dunleavy’s call for a full payout argue that unless the law is changed, the calculation should be followed. Others consider the calculation outdated and unsustainable.

The rub comes with the Legislature’s decision last year to use permanent fund earnings — long used to pay dividends — to help cover government costs amid disagreements over budget cuts and taxes and a continued drawdown of savings. Lawmakers also last year sought to limit what could be taken from fund earnings to pay for dividends and government. Alaska has no statewide sales or personal income taxes, and Giessel said, “at this point, we don’t see that people want a tax, either.”

The earnings reserve was valued at $19 billion at the end of April, and Dunleavy has argued the money is there to pay full dividends. But critics worry about overspending from the reserve.

The House Rules Committee introduced a resolution calling for a future special session to address use of permanent fund earnings, and it was on Wednesday’s House calendar, but it had not been taken up yet.

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House and Senate negotiators working on the operating budget agreed to a cut for the University of Alaska system that is a fraction of what Dunleavy proposed. They also proposed cutting less from the state ferry system than the administration and did not include funding to help continue paying off remaining oil tax credit obligations, instead deferring to a bonding plan initiated by former Gov. Bill Walker that has been the subject of a legal challenge.

Negotiators also agreed to advance funding for schools for the fiscal year starting July 1, 2020. That is similar to action taken by lawmakers last year to fund schools for the upcoming fiscal year that Attorney General Kevin Clarkson has argued is unconstitutional.

Dunleavy said he expected action on the budget, crime package, dividend and education funding or “we’ll have to have a special session.” He announced a news conference for early Wednesday evening.

He has called for lawmakers to include in the budget school funding. Legislative leaders have balked, standing behind their actions last year in approving money for the coming year as valid.

The state capital budget and a sweeping crime package also have to be finalized. Giessel said she expected resolution on the crime bill Wednesday.
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