Alaska legislative panel suggests state follow spending cap

JUNEAU, Alaska (AP) — A legislative panel has failed to reach an agreement on potential changes to the Alaska Permanent Fund dividend, leaving lawmakers with little guidance on how to balance the state budget.

The state has struggled to balance its budget, which contains a $1.5 million deficit if legislators and Republican Gov. Mike Dunleavy don’t raise taxes, cut services or reduce the Permanent Fund dividend.

The Bicameral Permanent Fund Working Group's only recommendation was that the Legislature should not violate a spending cap approved in 2018.

“We were able to establish and recommend that the Permanent Fund should be protected from inflation and the Legislature should not utilize more of the earnings reserve” than is outlined in the law limiting the draw to roughly 5% of the fund’s overall market value, House Finance Committee Co-chair and Republican Jennifer Johnston told KTOO-FM.

Republican Sen. Shelley Hughes is concerned that the the law limiting the draw will not limit spending from the fund’s earnings reserve, since the Legislature has previously chosen not to follow the 1982 dividend formula law and can do so again, she said.

The group decided Monday against a specific change to the formula for setting Permanent Fund dividends meaning the dividend should be followed.

The eight-member legislative panel was created last year to provide policy recommendations on the fund.

“It was my perspective that our scope of work was somewhat restrained, so it never felt that we never threw ourselves headlong into looking at new dividend formulas,” Democratic Rep. Jonathan Kreiss-Tomkins said, adding the group's work was not a failure.