The state House has approved a Permanent Fund dividend of about $1,100 this fall, but even if the Senate agrees and the governor signs the appropriations bill, it is too late to avoid a delay in sending out the payment to Alaskans.
Full approval was needed by Tuesday if the state were to meet its traditional date of issuing the annual PFD by the first week of October, according to a Department of Revenue spokesperson, who added that the dividends could be issued about 30 days after elected officials settle on the amount.
The House passed the appropriations bill after lengthy and contentious debate Monday and Tuesday over the amount of this year’s dividend, with a contingent of predominantly Republican lawmakers pushing for a much larger payment to Alaskans.
But about half of the $1,100 is questionable. It would draw on a state account that is empty, the governor’s office said Tuesday, though many lawmakers disagree with that interpretation of a recent court decision on state accounting. The House majority contends the money is available for appropriation.
If the account is not available, the dividend would be about half
If lawmakers are unable to agree on a dividend amount acceptable to the governor, there will no payment this year.
The Senate was scheduled to meet Wednesday, though final action on the spending bill was not certain.
As of Tuesday, Gov. Mike Dunleavy had not publicly stated his position on an $1,100 dividend, which would be about $100 higher than last year and just under the average of the past decade — but not even half of the $2,350 PFD he has advocated all year.
In June, the governor vetoed the dividend approved by lawmakers — $525 — calling it a “joke.”
Paying anything more than the $1,100 House number would require withdrawing additional money from the Permanent Fund, exceeding the annual limit adopted by the Legislature in 2018 to protect the fund from excessive drawdowns.
The state has been using Permanent Fund earnings the past three years to pay for public services and dividends. Any additional money directed to the PFD would require cuts to public services, taking more out of the savings account, or new taxes.
Senate Finance Committee Co-chair Bert Stedman said many of his constituents “don’t want to pay taxes to have a big dividend.”
The Sitka lawmaker, in his 18th year in the Senate, said, “They want the biggest dividend they can get without taxes. That’s the tradeoff we’re trying to, I guess, rectify.”
Top members of the Senate Finance Committee strongly oppose drawing more money out of the Permanent Fund to pay larger dividends.
Rep. Ben Carpenter, in his second term from Nikiski, said the amount of this year’s check can’t be lawmakers’ sole focus.
“We need to remain focused on achieving structural change that will stabilize the dividend and the state’s finances and not make everything just about the dividend because then people don’t focus on solving the problem,” he said.
Carpenter, however, voted Monday night to pay a $3,800 dividend this year, based on a 40-year-old formula the Legislature has not followed in the past five years because handing out that much money would have meant large cuts to public services or withdrawing billions more from the Permanent Fund. The $3,800 amendment failed 19-21.
Though legislators have talked about adjusting the 1982 dividend formula, and have considered new taxes to bolster the state’s finances, such as a state sales tax and an increase to oil production taxes, nothing has gathered enough support to win passage.
Andrew Halcro, a former Anchorage House member, said residents have a right to be angry about the delay in this year’s dividend, but the issue goes beyond checks.
“While we are all focused on how much we are going to pay Alaskans forever … the economy and the entire structure of Alaska is crumbling before our eyes,” he said.
Estimates show Alaska has lost population since 2016, the state’s maintenance backlog of public facilities is around $2 billion, and the oil and gas sector last year hit its lowest job numbers in decades.
Glenn Cravez, of Anchorage, wrote to legislators that he’s a longtime resident of Alaska, which has no state sales or income tax, and that “it’s wonderful to not pay those taxes AND receive a PFD check each year. But as adults, we know that money does not grow on trees, and that the free ride is over.”
House majority members — mostly Democrats — debated at length with minority Republicans over the size of the dividend, taxes and the state’s long-term fiscal future. Alaska has used savings to cover revenue shortfalls more than half of the past 30 years. Most of those savings are now gone, except for the $81 billion Permanent Fund.
In the closing hours of Monday’s debate in the House, which was characterized as “bickering” by one observer, House Speaker Louise Stutes, of Kodiak, asked: “Is this all we’re going to do? Look for things to pick on each other? And you wonder why nothing’s getting done. Good grief!”
The Legislature has been in special session for more than two weeks. The session will expire Sept. 14, unless lawmakers or the governor extend it.
The Associated Press contributed to this report.
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