Fourth special session ends Nov 2, with zero result. “If we come back again we won’t see anything new,” Rep. Delena Johnson says

In less than two weeks the Legislature must end its current special session, the fourth so far this year. The last day will be Tuesday, Nov. 2.

Like three other special sessions since the end of June, all aimed at a new agreement on the Permanent Fund Dividend, or PFD, this one will come up a zero like the others.

Is it worth another try this year?

Rep. DeLena Johnson, R-Palmer, is doubtful. “I think it we come back again we won’t see anything new. There’s just a lack of action, and we have a week left in the special session,” Johnson said in an interview.

“I can always hope, but people are exhausted – the public, legislators and staff – with endless special sessions. We’ve reached the point of diminishing returns,” she said.

The product earlier in the summer of a House-Senate bipartisan working group is a start, “but it’s not a final product. It was a good effort, and any time we can get people with such differing views forced to talk it’s positive,” Johnson said.

It was a good-faith effort to get a fiscal plan to the floor (of the State House) but again there has been a lack of action, she said.

The parts of the problem are well known, but people have different perspectives on the solution. “It’s like the story of the blind men feeling parts of the elephant, the trunk, the feet, and disagreeing on what it is. In my opinion we must settle the endless debate on the size of the dividend each year. That is one positive outcome of a dividend advisory vote,” on a new PFD formula.

As for talk of new revenues, “How can we do any kind of tax now, with the economy in such uncertainty because of COVID. We shouldn’t talk about taxes until we know what the draw from Permanent Fund earnings will be for the dividend. Until we know that we can’t project the revenue stream needed to balance the budget,” she said.

And now inflation is on the horizon. “If we have six percent to eight percent inflation and we put a three percent sales tax on top of that, it’s 11 percent,” in loss of people’ buying power. “That will have significant effects,” Johnson said.

Oil prices are up but the state’s oil industry faces its own uncertainties. “We hear that ConocoPhillips is expanding in the Permian Basin, which means less of its attention will focus on Alaska. Federal policies are affecting the industry, and ANWR is being shut down,” Johnson said.

Alaska’s oil industry changing, too. “The North Slope is no longer dominated by large ‘super major’ companies who also have interests outside of Alaska. Taking their place are smaller companies who are aggressively drilling and who are focused on their Alaska holdings,” she said.

“Against all of this uncertainty one thing that is within our power is to stabilize the state fiscal situation, and that should start by stabilizing the PFD draw to add certainty to state finances as well as to the economy,” Johnson said.

She gives Gov. Mike Dunleavy a lot of credit for coming up with a proposed solution. “But we can’t get the Legislature to (seriously) discuss it. The Legislature is avoiding its responsibility, and if legislators can’t make a decision we owe it to the people to put it (a constitutional amendment) on the ballot,” she said.

The governor’s idea of “bridge fund” to finance a “50-50” PFD with half of the Permanent Fund’s annual payment to the state going to the dividend, “is something we can do this year because of the Permanent Fund’s performance,” Johnson said.

“We shouldn’t have to wait three or four years,” for the expected growth of the earnings to be able to fund the larger dividend.“It has to start by agreeing to the PFD formula. Once we do that, we will know the size of the gap between spending and revenue, and then and only then will we be in a position to make wise decisions on a sales tax or any other revenue measure,”Johnson said.

Rep.Harriet Drummond, D-Anch., has a view that is different than Johnson’s.

“The governor seems naïve at how complicated this package will be to assemble, and there’s a shortage of seasoned advisors around Dunleavy. It’s not clear who he is listening to,” Drummond said.

Also, the governor has been largely absent in the discussion, Drummon said. “I don’t think he was in Juneau much during the special session,” she said.

However, like Johnson, Drummond is pleased at the product of the working group, so far. ‘There is a general consensus on a framework that has formed around the working group’s document, but we have a lot of freshmen in the Legislature with little understanding of how long it takes to put the details of this together,” she said.

She is no fan, however, of an extra draw on Permanent Fund earnings, a key part of Dunleavy’s plan. “Your personal financial advisor would never recommend that you spend down your retirement account,’ for the short-term, but that’s just what can happen if we draw down the Fund’s earnings to pay dividends. “I’m frustrated at the lack of traditional fiscal conservatives in the Legislature,” Drummond said.