House approves nearly $1 billion in dividend plan

The House voted Friday to propose spending about $1 billion on the Permanent Fund Dividend this year, rejecting a Republican plan to spend $2.4 billion, which would have created a $1.4 billion deficit.

The plan proposes a $1,500 Permanent Fund dividend, but it will likely to trimmed to $1,000 or $1,100 in the Senate.

The House action was reasonable, given the refusal of the Legislature to enact taxes to pay for a bigger dividend, and the failure of Gov. Mike Dunleavy to provide any leadership on state finances since 2018.

Dunleavy has introduced a muddled tax plan this year, but failed to even get his legislative supporters to rally around it. Dunleavy deserves much of the blame for refusing to develop a compromise to end the annual PFD fight.

His complete withdrawal from the issue leaves a closely divided Legislature making the same arguments year after year.

Here is the Anchorage Daily News coverage of the matter.

The key amendment in the House was this one.

The names in red chose the grandstanding route on the dividend, supporting a reckless plan for a $2.4 billion dividend and a $1.4 billion deficit. It was hardly a red-letter day.

The names in green voted for a responsible position that does not create a giant deficit.

Most House Republicans, along with Democrat Neal Foster, wanted to take about half of the savings in the Constitutional Budget Reserve to pay for a Permanent Fund Dividend that would cost the state $2.4 billion. The 22-18 vote was for a $1 billion dividend.

Rep. Kevin McCabe, who endlessly complains about government bloat, led the grandstanding effort to spend $2.4 billion on dividends and ring up a $1.4 billion deficit.

He claimed the 22-18 vote in the House proves that the government is bloated. He claimed later on Substack that the Legislature was guilty of “pilfering” money from Alaskans. Pilfering is stealing. It’s a crime. That’s not what happened here.

What McCabe and the other Republicans never say is how they would cut $1 billion or $1.5 billion from the state budget. They like to nibble around the edges by cutting a million here or there.

McCabe proposed cutting some fund for travel Outside by the Dunleavy administration, saying Dunleavy ordered a freeze on Outside travel a year ago, but Dunleavy has ignored Dunleavy’s order. This may be typical of the do-nothing Dunleavy administration, but travel is a small matter in the big scheme of things.

McCabe acts as if he has a secret plan to cut $1.5 billion, but he can’t talk about it.

All he has to do is look at what Dunleavy did in 2019 with the so-called “Honest Budget” that would have cut $1.5 billion. McCabe was not in the Legislature then, so perhaps he doesn’t know what happened. Dunleavy retreated on his plans to cut $1.5 billion to keep from getting recalled.

I might have some respect for the position taken by McCabe and other fans of the $2.4 billion PFD, but only if they would admit to voters that the $2.4 billion PFD would require eliminating most state agencies or ending funding for education or approving $1.5 billion in new taxes. They won’t do that, of course. They lie by omission.

I challenge any of them to put a plan on the table that contains real numbers.

McCabe and some of the other so-called conservatives claim there is plenty of money in the Permanent Fund, there is no need for inflation proofing and taking out an extra $1.5 billion wouldn’t hurt.

There are many billions in the earnings reserve that haven’t been spent, McCabe said. They keep this up and they will destroy the Permanent Fund.

Anchorage Rep. Andy Josephson, co-chair of the House Finance Committee, correctly noted there is no collective effort to raise $1.5 billion in new taxes and no one has explained how the government could be cut by $1.5 billion.

The reason that legislators who clamor for $2.4 billion in dividend spending never say what cuts they want or what taxes they support to pay for it, is that the voters let them get away with it time after time.