NFIB State Director says Alaska's Second Special Session was mixed bag for small business owners
Alaskans were shocked to wake up to the news of Senator Chris Birch’s sudden passing two nights ago. I first met Senator Birch at a miners breakfast in Juneau where it didn’t take long for us to learn we had a lot in common. We both grew up in family mining camps in the Brooks Range and shared a passion for the mining history of the upper Koyukuk/Chandalar mining districts. Chris and I shared many friends and common stories but he had a special gift as a storyteller and an excellent memory for people and events. It is with great sadness that I come to grips with his passing. On behalf of the NFIB family and the small business community in Alaska, I would like to send my condolences to the Birch family.
Senator Birch’s passing casts a dark pallor over the end of the second special legislative session. Governor Dunleavy signed SB 2002, which funds a capital budget that ensures federal funding for highway and infrastructure projects, which is certainly a positive step forward. The legislature also passed HB 2001, which restores all of the governor’s line-item vetoes to the operating budget, minus approximately $20 million to the university, and provides for a $1600 permanent fund dividend (PFD). HB 2001 also proposes to close out the budget cycle and provide an appropriation for the PFD. However, it is unlikely that the Governor will agree to sign HB 2001 “as is.” There will likely be vetoes to individual appropriations and an attempt to negotiate on a larger final PFD amount. Governor Dunleavy has promised a full statutory PFD, which under the current formula would pay out approximately $3000 to every qualified Alaskan resident, without imposing new taxes. HB 2001 is an opportunity for compromise: a large short-term payout of PFD’s balanced by long-term stability offered by a new statutory formula.
In conversations with small business owners around the state, I have come to the conclusion that the small business community falls on both sides of nearly all of the major issues under discussion in Alaska at this time. Take the vetoes to the university as an example. Nearly every small business owner I have talked to is critical of the UA system’s administrative inefficiencies. Some business owners full-heartedly support the Governor’s vetoes to UA while voicing support to the argument that UA needs to be more aggressive at finding their own sources of revenues. Nearly every business owner at the same time recognizes the economic impacts and risks posed to certain small businesses by the loss of 1,200 to 2,000 well-paying university jobs in the state. This year’s PFD amount is probably the most charged and contentious issue of the day. Once again small business owners are split on the best approach to the PFD moving forward. Some owners are concerned that paying large dividends today will result in new taxes on the private sector in the long run. Other owners hold the opinion that the PFD is the mechanism for every Alaskan to access their share of the commonly owned oil wealth in the state. Some businesses rely on the bump in spending after PFDs are paid, while others see more benefit from public sector employee purchasing power. Government jobs and spending are important to Alaska’s private sector, and as a result, the small business community finds itself with a plurality of opinions on the best path forward.
Alaskan’s small business community is not alone, Alaskans of every walk of life are divided across the state as to solutions to the major issues confronting our elected leaders. Part of the reason for the division and conflict in the state is the dissonance between fact-based analytical decision-making and politically popular messaging and campaigning. Our elected and appointed leaders have access to solid data and analysis on virtually every topic from trends in mental health and homelessness to the in-state economic benefits of the PFD. The problem is that data and analysis do not always support popular decisions and the public’s trust in government is currently low. These two principle problems are compounded by the fact that expert analysis can contradict itself and certain public officials are especially adept at exploiting popular notions to political effect. On one hand, the data and analysis required to make defensible decisions can be superficially flawed, and on the other hand, eroding trust in government and analysis creates an opportunity for certain personalities to further erode trust to achieve political ends.
There will likely be a third special session to address the PFD later this fall. Your elected officials are an excellent source of information and are easily accessible in Alaska. I encourage small business owners to reach out to their elected officials to not only express opinions on a path forward but to open up a conduit of communication to receive information and analysis. If the legislature and Governor ultimately agree to pay large PFDs in the near term there may be a heightened risk of new taxes either statewide or locally. Paying smaller PFDs in favor of maintaining government services is unpopular and politically challenging as portions of the private sector and individual Alaskans will lose access to revenue generated from commonly owned resources. Governor Dunleavy has moved forward with an aggressive suite of reforms to state spending, the PFD, and previously sacrosanct institutions like UA. I encourage all business owners to take advantage of this time after the second special session to reach out to your legislators and find out what decisions they made in 2019 and what those decisions will mean to your small business. Government’s footprint in Alaska is shrinking and this is a critical time to become engaged and informed.
Thor Stacey
NFIB State Director
