Senate Finance Committee passes bill for $3,000 PFD

With about three weeks left in their 2019 regular session, legislators in Juneau are playing poker with Gov. Mike Dunleavy over budget cuts, the Permanent Fund Dividend and a package of constitutional amendments and crime bills the governor wants.

On Friday the Senate Finance Committee upped the ante in its version of the state operating budget, House Bill 39, by passing the bill from committee with money for a $3,000 PFD.

The committee didn’t reduce the budget total in the bill, so money for the PFD would have to come out of the Permanent Fund Earnings Reserve.

This would increase the draw from the reserve account beyond the limit of 5.25 percent of the Fund’s market value set in last year’s Senate Bill 26.

Senators on the committee are actually divided on the amount for the PFD, and the movement of the bill with the $3,000 dividend is seen as part of a broader negotiating strategy with the governor.

Talks between legislative leaders and the governor will continue once the budget has passed the Senate and a House-Senate budget conference committee is established.

Dunleavy takes the position that there should be no further draws from savings, and wants to slice $1.6 billion in state general funds from a $4.6 billion operating budget, or about one fourth, to leave enough money for a $3,000 PFD.

Lawmakers say spending reductions at that scale would be devastating for schools, the university and the economy, which would lose several thousand jobs. They want smaller spending cuts. Both the House and Senate are rejecting the governor’s reductions.

Dunleavy has a strong hand to play if legislators continue to balk at cuts because he can use his veto authority to trim the budget back to the level he wants.

But legislators can refuse Dunleavy’s higher dividend, if they choose

, and it is they, not the governor, who approve new spending. Dunleavy can only cut spending, using his veto.

Legislators can overturn the governor’s vetoes with a three-quarters vote of the 60-member Legislature, but whether 45 votes can be secured for that is uncertain. What gives Dunleavy a good shot at fending off a veto override is that nine legislators, including three senators and six House members, are from the Matanuska-Susitna Borough that is also the governor’s home turf.

But if Dunleavy goes too far, for example in cuts to local governments and schools that raise local taxes, some of the Mat-Su delegation may peel off from the governor.

The poker game will go on between now and mid-May, when the Legislature adjourns at its 120th day. It will involve the size of the dividend and the budget, but also constitutional amendments the governor says are “must haves” before he’ll be cooperative on other things, and a package of crime bills Dunleavy says are priorities.

At this point all of these things are up in the air. Three crime bills introduced by the governor are moving through the Republican-controlled Senate, but the state House, controlled by coalition of Democrats and Republicans, has its own idea about crime reform. House leaders have not been receptive to the governor’s proposals. Crime bills may have to be held over the interim until the 2020, but there is also a possibility they can be taken up in a special session,

The constitutional amendments, which must be approved by two-thirds of the 60 legislators, face a tough road, too.

An amendment with a cap on spending has the best prospects and a number of legislators like Dunleavy’s proposal for putting the Permanent Fund Dividend into the constitution as a guarantee, but the governor’s idea for an amendment to require a public vote for any state tax increase has drawn little support.

Amendments, is approved, would go before voters in the 202 general election.

The Senate Finance Committee meanwhile is working on versions of a spending cap and a PFD guarantee in state statute, arguing this would give a year to “test drive” the mechanics of these, and still be able to consider them as constitutional amendments next year in the 2020 legislative session.

If amendment were approved in the 2020 session they can still be put on the ballot in the 2020 election. Senate leaders who have discussed the idea with the governor said he appeared receptive.

The budget, PFD and crime are occupying most legislators’ attention but there are a bills on other subjects being work on, and a handful of these may pass this year.

One measure that appears to be on a fast track is a bill, Senate Bill 93, that would allow health care providers, working through the state Department of Health and Social Services, to offer cash incentives to skilled medical professionals to work in underserved areas, mostly small communities.

The program would build on the success of two similar incentive programs, one using only federal funds and the second involving state funds combined with private employer contributions.

Both worked through the state health and social services department.

The Senate bill was sponsored by Sen. David Wilson, R-Mat-Su. It passed the Senate unanimously April 22 and was move out of the House Finance Committee April 26. The bill is now in the House Rules Committee waiting to be scheduled for a vote of the full House.

That would mean final passage for the bill, although it must also be approved by the governor.

Another bill that is an advanced stage of passage is Senate Bill 74, with Sen. Lyman Hoffman, D-Bethel. The bill would extend a program of grants for school districts to match federal funds to upgrade broadband capability.

Hoffman’s bill, which is in the Senate Finance Committee, increases the broadband requirement for schools from 10 megabits per second (Mbps) to 25 Mbpsof download speed, and provides funding to help schools reach the 25 Mbps.

Many schools in Alaska, mainly in small communities, lack internet bandwidth capacity to offer access to on-line classes and other educational opportunities. Hoffman now has nine cosponsors in the Senate on SB 74 including Sen. Mike Shower, R-Mat-Su. Rep. Sara Rasmuson, R-Anch., has a similar proposal in the state House, in House Bill 75.