Foster Report
Governor Dunleavy called the legislature into a third special session beginning August 16. In this report I will discuss the size of the permanent fund dividend (PFD), power cost equalization (PCE) and the Governor’s agenda for the special session.
Size of the PFD
I voted for a full $3,500 PFD in House Finance. I voted for a full $3,500 PFD on the House floor. And I voted against the small $1,050 PFD that passed in conference committee. As a matter of fact, our district was well represented on this issue as Senator Olson also voted for the full PFD.
For many in rural Alaska, the PFD is important because it pays for basic needs including heat and food. This summer’s low fish returns makes the PFD all the more crucial. (I have asked the Governor to direct Fish & Game to lift restrictions on subsistence fishing.) And our communities are still suffering from both the health and economic related effects of the global pandemic. If there ever was a time to tap into our rainy-day fund...now is that time.
The Governor has made the full PFD one of his highest priorities, but so far he has been unable to convince enough of the 60 legislators in both the Senate and the House to support it. The House Republican Minority even voted “no” to fund half of it, which meant that the PFD was further cut to $525.
In a strange twist, the Governor did not add setting the PFD amount to the special session agenda. The Governor vetoed the $525 PFD, and everyone assumed it was because he wanted the legislature to re-vote on a full PFD. Nobody can figure out what his strategy is, but the issue will have to be taken up at some point.
Power Cost Equalization
Rural Alaska’s energy assistance program is called PCE. Households in Brevig Mission, for example, receive on average $1,800 per year to reduce their cost of electricity.
There is $1 billion in the PCE fund, and the earnings from that fund are used to pay for the program. This year, however, urban Republican legislators voted “no” to renewing the program. If this is not fixed then many of the 80,000 people who rely on it will have to choose between electricity and other basic needs.
The easiest way to fix this is for Governor Dunleavy to remove PCE from the list of what are called “sweepable funds.” These funds require a three-quarter vote to keep them capitalized. Prior Governors did not consider PCE to be sweepable, which means that PCE only required a majority vote. But Governor Dunleavy added PCE to the list. Various Native and rural entities have taken the Governor to court, and I am hopeful that it directs the Governor to reverse his action.
Special Session Agenda
The Governor added three things to the special session agenda. This includes constitutionalizing the PFD/PCE, constitutionalizing a spending limit and addressing the need for additional revenue.
Adding an amendment to the state constitution requires a two-third vote from the Senate and House and a majority vote from the citizens of Alaska.
I am generally supportive of constitutionalizing both the PFD and PCE. The PFD might have a shot since it affects everyone. But PCE is seen as only benefiting rural Alaska. So its chances of being added as an amendment to the Alaska Constitution may not be as high.
There is already a spending limit in our constitution, but the formula is so open that it doesn’t have any effect. While a spending limit makes some sense, I am concerned that disproportionate spending cuts are often directed toward rural Alaska.
In terms of new revenue measures, the Governor has not specified what he wants addressed. It could take the form of an income tax, sales tax, increased excise tax (like on cigarettes or gas), or increased oil taxes.
A few years back I voted “no” to giving the oil industry the tax credits that it enjoys today. The “per barrel tax credit” costs Alaska a billion per year. This is money that could be used for the PFD. More recently, I voted to reduce those tax credits. That vote failed, but I would be happy to take that up again during this special session.
As always, if folks have suggestions or need help navigating state programs please feel free to contact me at 800-478-3789 or email me at Rep.Neal.Foster@akleg.gov.