$3,892 PFD gains momentum – New budget becomes the reason for discussion

$3,892 PFD gains momentum – JUNEAU, Alaska – The Alaska House Legislature on Thursday advanced a budget proposal that, if passed, would provide eligible Alaskans with a Permanent Fund Dividend (PFD) of nearly $3,900. The decision comes as the state grapples with a large budget deficit.

The proposed dividend is based on a statutory formula created in the 1980s that was last implemented nearly a decade ago. State lawmakers have set the PFD amount since 2016, and in 2017 the Alaska Supreme Court made it clear that the Legislature has the final say.

Budget crisis and dividend debate

The House Finance Committee passed House Bills 53 and 55, which focus on state spending, at its Thursday meeting. However, differences remain over the dividend amount. An amendment to reduce the $3,892 amount to $1,000 proposed by Governor Mike Dunleavy was hotly debated by members.

Rep. Nelly Unanghik Jimmy (D-Toksook Bay) opposed the amendment, saying the average annual income in her district is less than $21,000. She said in some rural areas people heat their homes with ovens because they don’t have stove oil. The dividend amount could help lift 40% of her area’s population out of poverty, she said.

Fiscal balance vs. public interest

Rep. Calvin Schregg (NA-Anchorage), who co-chairs the committee, supported the dividend cut and said balancing the budget is imperative. He made clear the state has limited resources and paying the full dividend would put a strain on other essential services.

He said, “If we don’t take responsibility here, someone else will. But I don’t want to leave this responsibility to others.” He feared that giving more money would put so much pressure on the Permanent Fund that the dividend program could end in the future.

The option of imposing a tax was also brought up, but there was no consensus on it in the committee.

Mixed reactions from legislators

Rep. Delina Johnson (R-Palmer) linked the dividend to people’s freedom and economic self-reliance. She said, “PFD gives people the opportunity to make their own decisions to improve their lives. Reducing it would be unfair to people.”

Rep. Alice Galvin (NA-Anchorage) said that they are facing the challenge of a $1.6 billion budget deficit, and it is necessary to keep all options on the table. At the same time, Rep. Andy Josephson (D-Anchorage) said that the average dividend in the last 35 years has been $1,150. He recalled that the fund was allowed to be used as an endowment for state operations through the SB 26 law passed in 2018.

Legal aspects and court decision

In 2017, the Alaska Supreme Court clarified that the Legislature’s approval is required to spend the earnings of the Permanent Fund. The court also said that the governor has the right to veto the dividend amount. Article 9, Section 7 of the Alaska Constitution, called the Anti-Dedicated Fund Clause, prohibits the state’s tax income from being reserved for a special purpose.

This means that the fund’s earnings can also be used only under the normal budgetary process – the Legislature will pass it and the governor can veto it as needed.

Result of the amendment and way forward

Amendment No. 95 was rejected by the committee by a vote of 7-4. Those members who were against it wanted the original proposed amount of the dividend to remain. The bill has now been sent to the Rules Committee, but a date for when it will be brought back to the House has not yet been set.

Conclusion

Alaska’s Permanent Fund dividend is deeply intertwined with state politics, the economy, and social justice. While some legislators believe large amounts of money provide relief to poor and rural citizens, others see it as an economic burden the state can’t afford.

Budget deficits, revenue limitations, and legal complexities complicate the debate. Whether the dividend goes into public pockets or gets swallowed up by budget needs is a decision the state Legislature will have to make in the coming days.

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