State lawmakers are working toward resolving the state’s budget by the end of the session in mid-May.
Legislating the future payout of Alaska’s Permanent Fund Dividend, however, is a hotly contested process. The governor says he wants to send payments of $3,000 out to every Alaskan later this year. But Lynn Canal’s Democratic State Sen. Jesse Kiehl says that’s a slippery slope proposition because once you dip into the reserve fund, people will keep dipping into it until it’s gone.
“If you draw up to 5% of the total value, and no more, the fund earns more than that. And that takes care of inflation. Right. So you always have the real value of that fund, plus whatever oil money continues to go into it for growth. But if you draw more than that, then you start eroding the buying power of the fund,” said Kiehl.
According to Kiehl, a fund that can produce a consistent dividend check to Alaskans and provide the services Alaskans need, like ferry systems, police, and schools, is what the legislature must protect. Right now the principal on the Permanent Fund sits at about $58 Billion, with an earnings reserve of about $12 Billion, which includes cash and investments. Kiehl says that in order to properly safeguard the future of the Fund, the Alaskan government needs to protect both the principal and the reserve. The Governor’s plan would access funds in the reserve that are not protected by the state constitution.
Bringing reliable Alaska Marine Highway System service to the upper Lynn Canal is also on the agenda during the legislative session. Kiehl said federal American Rescue Plan dollars will most likely be used to improve the system, but not much will be done to bring additional wintertime sailings to Haines and Skagway.
“There is one really significant step forward, real progress. And that is an agreement with the governor to use some of those American Rescue Plan dollars to fund the ferry ahead 18 months and move the ferry budget to a calendar year budget January one to December 31,” said Kiehl.
According to the Democratic State Senator, moving to a yearly calendar and publishing the schedule six months ahead will give Alaskans adequate time to plan travel, and also add revenue by allowing the sale of tickets in advance. But he acknowledges it doesn’t address the poor reliability in the region.
“Now, that doesn’t add any service weeks. And that’s the next improvement we need to do. That doesn’t fix the decrepit old vessels and the single vessel at a time, which means a single point of failure system that we have right now, those have got to be the next steps and we’re not going to give up on those,” said Kiehl.
Adding crew quarters to one of the Alaska Class Ferries is being discussed, but even if that happens, according to Kiehl, that new vessel will only be a replacement for an older vessel like the LeConte or the Aurora.
“The deal with the governor was willing to strike was this pre-fund a year and some get on a calendar year basis using federal funds. He was not willing to do any more service which is a hard, bitter pill to swallow,” said Kiehl.
Discussions are ongoing within the state legislature as well about properly distributing American Rescue Plan Dollars to Alaskan municipalities.
“You will notice that the house, in their version of the budget, is using American rescue Plan act dollars to distribute what communities would have gotten in the state’s cruise ship tax, but without those restrictions, so that’s a big help,” said Kiehl.
Kiehl doesn’t think they will be done with the budget in time. That doesn’t mean the state will be operating without a budget, that means the house and senate will have to come back for a special session, if that is indeed the case.
