Stedman Sees End to Budget Impasse

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Category: Local News

Created on Tuesday, 31 August 2021 00:09

By SHANNON HAUGLAND
Sentinel Staff Writer

The size of this year’s permanent fund dividend could be anywhere “from 0 to $1,100 to $2,300,” says Sitka’s state senator, Bert Stedman.

“Any of those outcomes are possible,” Stedman told the Sentinel today. “The vast majority would like to have a permanent fund dividend – including myself. The issue is the size of the PFD and overdrawing the permanent fund.”

The Republican co-chairman of the Senate Finance Committee spoke to the Sentinel as he waited for his flight back to Juneau to continue the third special session called by the governor to address the Permanent Fund.

“Senate Finance is waiting for the House to send the bill but it may be hard to get enough members ... on the committee and the (Senate) body on the floor,” he said.

Stedman said the Legislature voted in favor of a $1,100 dividend but lacked the votes needed to fund more than $525. Gov. Mike Dunleavy favored a “50-50 dividend plan” for a payout of $2,350, and vetoed funding for the $525 payout.

“We’re trying to put together an $1,100 dividend,” Stedman said. “It could go either way (from zero to $2,300). The concern is how we deal with the permanent fund – are we going to overdraw it and spend the earnings reserve (the non-constitutionally protected portion of the permanent fund)? Some people are more sensitive to it than others.”

Those advocating for the $1,100 payout say it’s the maximum the state can afford without overdrawing the earnings reserve.

Stedman said the debate is one that crosses party lines, and there is a diversity of views on both House and Senate sides, and across the state. He had no predictions on the final outcome.

“Zero to $1,100 to $2,300 – it could be any of those, and anywhere in between,” he said.

One of the main obstacles of the session that started earlier this month is the fact that it has gone far beyond the 120 days most legislators had planned on spending in session.

“It depends on who’s going to be there when it comes time to vote,” Stedman said. “One of the compounding difficulties when the Legislature has multiple special sessions, it becomes more difficult to meet, people get tired, they have lives to lead and family issues. It makes it hard to get everybody together. Unfortunately the governor is calling special sessions and the Legislature should have a break.”

Stedman said Dunleavy is about $800 million short if he wants to fund a $2,300 payout, which could mean $800 million in new taxes.

“Someone’s got to pay it ... it’s an $800 million hole to implement the 50-50 plan,” Stedman said. “The math doesn’t work. And (Dunleavy) hasn’t brought forth any tax or budget reductions to fill the gap. We don’t have hundreds of millions in budget reductions because the budget’s been going sideways for years.”

Stedman added that the reductions by cutting the marine highway and the state university were spent by increased costs in the Department of Corrections and pensions for teachers and state workers.

Although there are other unresolved issues – such as writing a new formula for the permanent fund – Stedman said he’s in favor of actions that “get this year’s dividend concluded, and adjourn.”