Rising oil prices offer glimmer of hope for majority vote on dividend compromise
It’s impossible today to get three-quarters of the Legislature to agree on anything important.
But in a system where majority rule should be sufficient, the Alaska Legislature has proven that it is capable of dealing with the most important issues of the day.
For instance, a majority of legislators voted for a Permanent Fund dividend of $1,100 this year, one of many reasonable compromises in the state budget.
But the Republican minority in the state House—urged to do so by Gov. Mike Dunleavy— opposed the budget and blocked funding for nearly half of the dividend, slicing the amount to $525 per person.
Gov. Mike Dunleavy was shocked, shocked that the $525 dividend ended up on his desk because Republicans in the House did what he asked them to do.
“Urge your legislators to vote no on this coercive budget,” Dunleavy said in a state-funded missive to his supporters in June.
“Our legislators must stand up to the bullies who believe government deserves your PFD,” Dunleavy said.
The letter repeated the latest big lie from Dunleavy, which is that his plan for bigger dividends, no taxes and no real cuts in services will balance the budget in five years. He is recycling the pandering plan of 2018 in hopes he will be re-elected next year.
Dunleavy cut the dividend to zero in his latest act of grandstanding, and never explained his role in helping create the $525 dividend that he despised.
“It was a joke,” Dunleavy said last week about the $525. “Nobody’s taking it seriously.”
“Some have used the term insult. Some have used the concept of ‘we’re being disregarded.’ But again there’s a number of legislators that want to get back and fix this issue. And so, $500 PFD, which would be the lowest PFD in history, especially when you look at inflation, in the midst of billions of dollars coming to Alaska. The idea that government needs to be protected at the expense of the people I think is a concept that most Alaskans don’t agree with.”
In fact, “the idea that government needs to be protected at the expense of the people” is not a concept, but a doddering Dunleavy strawman. Some have used the term insult.
The Legislature had intended to raise the amount at the next special session and will try to do so. Since a majority of legislators support an $1,100 dividend, they should go ahead and fund it with the increase in expected revenue generated by higher oil prices.
This would avoid the three-quarter-vote requirement, necessary to draw funds from the Constitutional Budget Reserve, at least on the dividend part of the budget.
Oil prices rose by 45 percent during the first six months of this year, far surpassing the predictions made by the state revenue department.
Oil is now about $75 a barrel and many analysts are saying that $80 a barrel is near at hand.
At $80 a barrel, the state takes in nearly $1 billion more than it would at $50 a barrel.
Goldman Sachs and JP Morgan are predicting $80 per barrel and higher, while the Bank of America says next summer oil could be back to $100. No one knows for sure, of course, which is why state finances should not be tied to oil prices.
These steps would return us to majority rule and bypass the obstructionist minority for the moment. Then, if Dunleavy wants to veto again, he will be replacing a $1,100 dividend with nothing.
This is a temporary political solution, not a durable long-term fix. The latter requires a fiscal plan that shows how to pay for state government, not Dunleavy’s hodgepodge of pandering points that are the foundation of his re-election campaign.
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