A $1,312 PFD and no special session
A $1,312 PFD and no special session
Don't hold your breath for a fiscal plan.
Happy Friday, Alaska.
In this edition: A $1,312 PFD will be heading eligible Alaskans’ way in early October, but the lightly anticipated special session to get to the bottom of the state’s ongoing financial woes isn’t happening. And with next year being an election year, which currently looks like it’ll be buoyed by higher-than-expected oil prices, I wouldn’t count on there being much progress toward a fiscal plan in 2024. Also, there’s the reading list and weekend watching.
Current mood: 🍂
Some good news: Karluk will have a school for the first time since 2018
A $1,312 PFD and no special session
With none of the usual hoopla, the state announced this week that this year’s PFD will be $1,312 and will head out in early October. Meanwhile, the seldom-talked-about fall special session that was supposed to address the state’s financial picture has gone the way of Gov. Mike Dunleavy’s sales tax proposal. It’s not happening.
According to a report by the Alaska Beacon, legislators confirmed this week that they’re too far away on the broad strokes of a plan for a special session to be much more than a waste of time. And with next year being an election year, which currently looks like it’ll be buoyed by higher-than-expected oil prices, I wouldn’t count on there being much progress toward a fiscal plan in 2024.
Here’s where things stood at the end of the legislative session: The bipartisan Senate Majority had passed a new PFD formula that allocated 25% of the spendable revenue from the Alaska Permanent Fund to the dividend with a sideboard to eventually step up to larger dividends down the line if a bunch of unlikely scenarios—namely much more new revenue—came to pass. The Republican-led House, which has seemed to delegate most of the heavy lifting on a fiscal plan to extreme-right Nikiski Republican Rep. Ben Carpenter and his Ways and Means Committee, essentially rejected the plan before it landed. Carpenter, it should be noted, spent most of the session pushing for a sales tax that would, in part, pay for a hefty cut to the state’s corporate income taxes.
What was expected to be a drawn-out, bitter battle over the dividend—the bipartisan Senate pushing for a smaller dividend on one side with the House Republicans going to the mat for the large dividend they had been demanding for years while in the minority—didn’t really come to pass in any significant way. Gone were the House Republicans’ threats of forcing a shutdown by rejecting the Senate-written budget. That can mostly be chalked up to the fact that the House Republicans—with their own divisions between the extremist, conservative and centrist factions—couldn’t corral the votes for pretty much anything without further fracturing (see also: The Republican-led U.S. House’s divisions sending the nation toward a shutdown).
That this has all culminated in a scrapping of whatever plans there were for a special session isn’t all that surprising. There remains a fundamental disagreement on the direction of the PFD that seems to come down to fundamental philosophical differences and disputes about the facts of the situation. Can the budget be cut more? Should taxes be implemented if they’re in service of paying a bigger dividend? Should we even have a government?
The bottom line: Despite the ups and downs of oil revenue and the financial markets, the state’s financial picture remains largely the same. There’s an underlying structural deficit where our revenues, in the long term, don’t support the payment of a PFD much bigger than $1,300 and the typical growth of government. In broad strokes, the three options are more money, less spending on government or less spending on the PFD—or a mixture of the three.
Or, hey, maybe oil prices will boom and we can pretend there isn’t a problem.
In the background: Watching how Dunleavy approaches this year’s budget will be interesting. Beyond the occasional use of the veto pen and the infrequent statement of ambiguous policy (like his sales tax proposal), he’s offered little leadership. But he recently cleaned house in budget management, giving the boot to the budget director Neil Steininger. While Steininger was often on the receiving end of heated questioning from legislators, he was generally well-liked.
“He did an excellent job and he toed the company line for his boss, whether it added up or not,” Sen. Bert Stedman told the Juneau Empire of his departure.
What’s next is the big question. There’s a lot of talk about an even more conservative turn for Dunleavy on the budget in the coming year—part of his continued hard-right turn after telling anyone who would listen that he was moderating out—with some anticipating a budget filled with the type of draconian cuts from his year one budget.
“He has three years left in his gubernatorial run,” Stedman told the Empire. “I highly suggest you get a competent OMB director. Donna Arduin isn’t one.”
Stay tuned.
Reading list
‘Wildly uncompetitive.’ Pot cultivators push the rules under tax strain
Anchorage Assembly Approves $250k for Legal Defense in Demboski Lawsuit
Anchorage IT director resigns amid accusations he broke election laws
With House Republicans in chaos, Alaska senators brace for a potential government shutdown
Mat-Su school district committee recommends removal of books, including one by Toni Morrison
Weekend watching
When gonzo journalism goes wrong, and your baby pays the price.
Have a nice weekend, y’all.