By GARLAND KENNEDY
Sentinel Staff Writer
As the Legislature pieces together the budget for fiscal year 2022, Sitka Sen. Bert Stedman is warning against spending down the Permanent Fund to provide a large dividend payment.
In his original budget proposal, Gov. Dunleavy called for drawing about $3 billion from the Permanent Fund to finance a dividend of $3,000 per Alaskan.
Stedman, in an online presentation to the Sitka Chamber of Commerce Wednesday, said this is unlikely to happen.
“(Dunleavy) used $3 billion extra out of the Permanent Fund Earnings Reserve, so he took all the standard five percent draw out of the Permanent Fund to state operations and another $3 billion to a dividend - which would be a statutory dividend - which would be roughly $3,000 per person. That is very likely not going to be the dividend, extremely unlikely. And the reason is, if we were to do something like that ... we would have a substantial budget deficit and we would be eroding the Permanent Fund. And some of us are concerned if we erode the Permanent Fund earnings reserve portion - the spendable portion of the fund - we have nowhere else to go when that money is gone and we still have a deficit,” the senator told the Chamber.
Bert Stedman (Sentinel Photo)
With legislative debate regarding this year’s dividend in progress, Stedman estimated a more middling amount than what the governor proposed.
“We’re going to have a conversation on the dividend amount, and it’s going to range somewhere between $500 and $2000, my guess. There’s nobody at $0 and there are very few people at $3,000,” he said.
Proposals for taxation in the state also have been aired as a method to close deficits, though Stedman doesn’t believe any taxes would pass immediately.
“There will be talk about tax structures being put in place. I don’t see anything of significance getting through the Legislature this year on that subject. That would include oil taxes, income taxes, sales taxes. Those discussions need to take place but we have a sizable workload we’re dealing with on these stimulus funds coming, but frankly there’s not enough time in the calendar to deal with it,” he said.
Shifting focus to Southeast Alaska in particular, the senator stressed the need for stability within the Alaska Marine Highway System.
“Stabilize the Marine Highway finances and put them in a position... that they have the ability to plan forward for not only their maintenance but all the communities that are going to get service, so everybody can have an idea several months out what kind of schedule they will be in. Scheduling is challenging and, frankly, broken,” Stedman said. He highlighted the AMHS Reshaping Report published this fall as an example of a possible reformation.
Published in October 2020, the report recommended the formation of a marine highway operations board “to assess and suggest marine business and procurement practices that enhance revenue and reduce cost, marine personnel management, commercial service options, ship maintenance, construction and repair plans and activities, fleet strategy, reliability and other service objectives.”
The reshaping group also highlighted the need for improved maintenance on the fleet.
Stedman noted this in his presentation as well.
“As they become more erratic in their ability to maintain their mechanical ability, it puts the shipyard in a tough spot because they have to be ready to service them whenever. We need to have ferries better maintained, need to have a better planning schedule for planning maintenance,” Stedman said.
As plans take shape, Stedman was optimistic about the possibility of stabilizing the ferry system.
“We can hopefully get a financial stabilization plan across the finish line in the next few months. I think the public will be pleasantly surprised when we put stuff on the table, at least us on the coast. Some of the ones that want the Marine Highway to go away might not be as happy,” he said.
The senator also noted that relief funds from the recent $1.9 trillion federal American Recovery Act will help make up for coronavirus-related shortfalls in Southeast’s economy, though specifics remain uncertain.
“We’ve been hit the hardest of any region in the state. We all know we’ve lost our large cruise ships from last summer and most likely this summer. And that has had significant impacts. And we had a crummy fishing season. We’ve been hit pretty hard. And some of these stimulus funds that are sitting at the table right now with the American Recovery Act… that has a lot of flexibility in the appropriations. We’re going to look at how we structure that,” Stedman reported.
Looking into the future, the senator said he hopes the resumption of cruise travel, coupled with the expansion of SEARHC medical facilities in Sitka, will improve economic conditions on the ground.
“If we can get our cruise industry back online - it will take a couple years - it will help us a lot revenue-wise,” Stedman said. “Any time we can expand our tax base, the example of the SEARHC expansion, we can get our tax base broader, that will help overall costs across the community. Not only in property tax but also in our electrical load. We need that hospital plugged into Blue Lake and sucking as much juice out of that bad boy as we can so we can all have a little better electrical rates.”
Regarding other projects in Sitka, Stedman emphasized the importance of a new seaplane base and said that the road to Katlian Bay is going well, but will likely require more funding.
