PFD paralysis puts budget, thousands of jobs at risk

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ANCHORAGE (KTUU) - Paralysis over the Permanent Fund dividend is putting parts of the operating and capital budgets at risk as well as thousands of Alaska jobs.

July 1 is the start of fiscal 2020, the deadline to pass what is known as the “reverse sweep,” a process that refills dozens of savings accounts that are automatically emptied at the end of every financial year.

The reverse sweep requires a vote of three-quarters of the members of both the Alaska House of Representatives and the Alaska Senate. That vote didn’t occur in 2019, because of opposition from the House minority, meaning as much as $1.6 billion could be drained from dozens of savings accounts on July 1.

Some of those funds include the Higher Education Fund, which provides scholarships for college-age students, and the Power Cost Equalization Fund, which helps rural Alaskans with their energy bills.

Sen. Natasha von Imhof, R-Anchorage, said that there could be “holes all over the capital and operating budgets” if those accounts are drained. She said that Senate and House leadership have been polling members to see if there is support for a special session before July 1 to resolve the problem.

Two-thirds of lawmakers would need to approve that special session. According to von Imhof, the votes aren’t there right now, meaning lawmakers will likely meet next in Wasilla for a special session on July 8 that deals solely with the PFD.

Gov. Mike Dunleavy said Friday that the delivering a full statutory dividend was the priority. “Once we get through the PFD, the issues with the capital budget will be taken care of pretty quickly,” he said.

North Pole Republican Rep. Tammie Wilson said there are conflicting accounts of what will happen at the start of the next financial year - which funds would be drained and if any money could be leftover.

A trip to the courts may be needed to resolve those issues, said Wilson.

House Minority Leader Lance Pruitt, R-Anchorage, described a net positive of draining the accounts was that there could be more “transparency in the budget process.” Lawmakers could see how many savings accounts Alaska has and which ones they want to eliminate, instead using Undesignated General Funds to fund programs.

Pruitt described that funding sources for the capital budget had changed with little notice, meaning his caucus wouldn't support funding parts of the capital budget or the reverse sweep.

A compromise had been offered: the House minority would support the capital budget if a $3,000 PFD was approved. The PFD vote failed as did funding for the capital budget.

Meanwhile, an important July 30 deadline that could affect hundreds of Alaska construction workers is approaching. The State of Alaska receives hundreds of millions of dollars from the federal government for highways and airports. Without a capital budget passed by the end of July, much of that money could be lost.

“Thousands of people with good high paying jobs across Alaska would be out of work,” said von Imhof.

Vince Beltrami, the President of the AFL-CIO, said he didn’t know exactly how many people that would impact and what would happen if those federal dollars didn’t come in - would work immediately stop?

The Interior had military construction jobs but relatively little road construction was driving a slow season across Southcentral Alaska. The loss of jobs would hit that region of Alaska particularly hard, he said.

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