JUNEAU, Alaska (AP) — Alaska Gov. Mike Dunleavy faced a tricky political decision.

Should he take a hard line in his push to pay residents nearly $3,000 this year from the state’s oil-wealth fund, a centerpiece of his campaign last year, or accept a lesser amount approved by lawmakers who have not been swayed by his arguments?

The Republican, facing a recall effort fueled by public anger over budget vetoes, opted for a mix, accepting the lesser amount, estimated around $1,600, but indicating plans for another special session focused on paying what he sees as the remaining balance.

But Dunleavy can’t force lawmakers to do anything they don’t want to do, and some legislative leaders said they couldn’t see agreeing to appropriate additional funds without agreement on changes to the dividend program going forward.

Dunleavy expressed openness Tuesday to legislative discussions on possible changes. “But first and foremost, we need to complete this incomplete dividend,” he told reporters by teleconference.

The governor earlier this year said he’s determined to get a full dividend this year, even if that means repeated special sessions.


Senate Minority Leader Tom Begich, an Anchorage Democrat, said it’s naive to think legislators would just show up to a special session and approve additional funds for a dividend without consideration of anything else. Begich said his caucus remains concerned about Dunleavy vetoes.

Debate over the dividend has overshadowed lawmakers’ work, contributing to drawn-out regular and special sessions.

Dunleavy ran on a full dividend payout, consistent with a longstanding calculation that has not been followed since 2016 amid an ongoing budget deficit and that many lawmakers see as unsustainable. He also has said Alaskans should get a say on any changes to the dividend program.

Tension with the dividend was heightened last year when lawmakers began using permanent fund earnings, long used to pay dividends, to also help cover government expenses.

Some lawmakers argue the calculation is at odds with a law passed last year seeking to limit what can be withdrawn from earnings for government and dividends. The principal of the nest-egg Permanent Fund has constitutional protections but its earnings can be spent.

Lawmakers began using earnings after going through billions in savings amid gridlock and disagreements over how best to tackle the deficit.


Funds sources used to cobble together the roughly $1,600 dividend passed this year included fund earnings and savings. Last year’s capped payout was $1,600.

“The cold hard truth is that we can’t afford a $3,000 PFD going forward unless we decimate the state budget or come up with a new source of revenues,” House Speaker Bryce Edgmon, an independent, said Monday, referring to the dividend.

Critics of the state’s existing oil-tax structure are pursuing a proposed ballot initiative that would change that tax structure. Dunleavy’s predecessor unsuccessfully pushed for a range of new or higher taxes. Dunleavy has focused on budget cuts.

Dunleavy was criticized for budget vetoes in June, some of which he later tempered after lawmakers, who didn’t have the votes to override the cuts, passed legislation requiring a lower threshold of support seeking to restore many of his cuts. Vetoes announced Monday included cuts to areas such as Medicaid and public broadcasting. He again vetoed about $335,000 from the courts, an amount his administration said was commensurate to state funding for abortions.

Budget documents say the “only branch of government that insists on State funded elective abortions is the Supreme Court.” The state Supreme Court struck down as unconstitutional a state law and regulation seeking to define what constitutes medically necessary abortions for Medicaid funding.

The ACLU of Alaska sued after Dunleavy’s initial veto of the funds. Dunleavy on Tuesday said “we all have to do our part” to reduce the size of the budget.


Joe Geldhof, who is affiliated with the Permanent Fund Defenders, which has supported the traditional dividend calculation, called Dunleavy’s decision to not veto the dividend amount approved by lawmakers politically smart. But he said skillful negotiations will be needed for Dunleavy to get more.

Republican Sen. Lora Reinbold also has supported following the calculation until it’s changed and said violating it “feels unjust to me.” She expressed disappointment with the administration’s negotiating skills so far and what she saw as missed opportunities.

There may be a “glimmer of hope” for a full dividend, she said, “but it’s been a frustrating year.”

Republican Sen. Shelley Hughes, who also has supported a full dividend, said she hopes there is discussion on a long-term resolution to addressing the dividend moving forward. She sees some kind of constitutional amendment as the best course.

“I wasn’t someone who once thought a constitutional amendment was a good idea up until more recently, when I’ve seen the circus and realized that we have to settle it because we’re neglecting other things that we should be working on,” she said.