JUNEAU, Alaska (AP) — A comprehensive fiscal policy for Alaska “must be negotiated and agreed to as whole” and not taken up piecemeal, according to a report from a legislative working group that was charged with making recommendations for the special session that opened Monday.
Pieces the report said the group agreed to as necessary parts of a comprehensive approach include restructuring Alaska’s oil-wealth fund and limiting what is drawn from it and providing constitutional certainty for a dividend for residents.
Other elements include a new dividend formula; new revenues; budget cuts and a “healthy” state infrastructure budget, as well as spending cap revisions and possible changes in how the constitutional budget reserve fund works.
Lawmakers faced with deficits in recent years have relied heavily on the budget reserve fund, which requires three-fourths support in each the House and Senate to access.
The report states that working group members “do not support addressing only one or two issues to the exclusion of others.”
The report said members recommended considering two approaches to the perennial debate over dividends: placing in the constitution a dividend formula or constitutionalizing the promise of a dividend that would be based on a formula in law.
It said members recommended working toward a formula that would provide half of what’s drawn from the permanent fund toward dividends, though Rep. Jonathan Kreiss-Tomkins, a co-leader of the group, said different members had different perspectives and that this was an assessment of “where a political median might be.”
The group agreed it was important to keep in mind in weighing a fiscal package what realistically could pass the Legislature, the report said.
It did not recommend specific revenue measures but said the Legislature should consider additional revenues of $500 million to $750 million, and budget cuts ranging from $25 million to $200 million over multiple years.
The report outlined two transition approaches, with some members favoring one or the other. One would take money from permanent fund earnings, in excess of a withdrawal limit currently in law, to help cover deficits through “the first few fiscal years” after a fiscal plan is adopted. The other would take a phased approach that begins with “more modest” dividends and steps up to what a dividend under a new formula would be.
Sen. Jesse Kiehl, a Juneau Democrat and group member, noted there wasn’t unanimity on a transition approach. “There are still hard questions to work out,” he said.
Kiehl said there would never be a “magical solution” that moves quickly through the Legislature.
“If our colleagues are willing to put in the work and do the same kind of hard talking that we’ve done, I think we can get to a place where a bill passes the Senate and a different bill passes the House and we watch each other like hawks” and shepherd through pieces of legislation, he said.
The group, which was composed of two members from each legislative caucus, was created in June as part of an effort to avert a government shutdown amid a budget dispute.
Gov. Mike Dunleavy has urged lawmakers to act on his proposed constitutional amendment that would restructure the permanent fund and put 50% of the draw from the fund toward dividends.
Concerns have been raised about costs associated with the plan, and House Speaker Louise Stutes told reporters she didn’t see support in the Legislature currently for a constitutional amendment for the dividend.
Proposed constitutional amendments require two-thirds support in each the House and Senate to qualify for the ballot.
The special session agenda, which Dunleavy set, did not include an appropriations bill for a dividend check this year or to address programs whose funding was left in limbo after a critical vote failed in the House and Senate earlier this year.
Dunleavy spokesperson Jeff Turner has said budget issues, including a dividend, “can be addressed at the appropriate time by adding an appropriation bill” to the agenda.
Stutes sent Dunleavy a letter Monday asking him to add an appropriations bill “immediately.”
Holding the dividend and “other essential programs hostage while we work towards a solution is unconscionable and counterproductive to compromise,” she wrote.
Meanwhile, the Legislative Council voted 8-6 to require masks at the state Capitol amid a rise in COVID-19 cases.
The city of Juneau requires masks in indoor public places, regardless of vaccination status, though the Capitol doesn’t fall under the city jurisdiction, said Rep. Sara Hannan, the chair of the Legislative Council.
The adopted policy, passed by the council Monday, calls for face coverings in legislative facilities regardless of vaccination status. A proposal that would have recommended face coverings failed.
The adopted policy also states that masks are optional in an individual lawmaker’s office but that masking rules must be adhered to if Legislative Affairs Agency staff or lounge staff are to enter. The lounge provides food service.
The council, composed of House and Senate leaders, in May voted to make mask-wearing optional, following an easing of testing rules as more people got vaccinated against COVID-19.
Recent U.S. Centers for Disease Control and Prevention guidance recommends masks in indoor public settings in areas of substantial or high transmission.