After years of legislative debate over the size of the Permanent Fund dividend, reasonable voices are starting to grow louder, maybe even hopefully strong enough to outvote the irresponsible catcalls for an unaffordable dividend.
It’s a welcome change.
A bill in the House would restore dividend sanity by setting the free-money check at a percentage of the annual draw of Permanent Fund earnings, producing about a $1,300 PFD this year and growing from there. That would be about equal to the average dividend of the past decade, before the election-year mega-PFD of last year.
The Senate Finance Committee was scheduled to hear a similar bill this week, also writing into state law that the dividend shall be set at 25% of the annual draw on Permanent Fund earnings.
The two proposals are known as 75/25. That’s 75% of the earnings draw for public services in the budget and 25% for the PFD.
It’s still early in the legislative process, with a lot more committee hearings, attempted amendments, floor votes, social media outrage and misleading and even dishonest math to come, but the fact that more legislators are stepping forward to responsibly confront the issue is encouraging.
The amount of the PFD has long dominated state politics, especially in the past seven years since then-Gov. Bill Walker in 2016 made the correct decision — though a politically fatal move — to reduce the dividend because the amount approved by legislators would have broken the bank. And neither the FDIC nor any other federal agency was going to step in and save the bank.
Since that year, lawmakers have debated the amount of the dividend until the final hours of adjournment, just as predictable as spring breakup, the start of king salmon fishing and the first cruise ships.
The fact that fiscally responsible dividend proposals are actually being heard in committee is encouraging, particularly in Senate Finance, which is in charge of writing the state budget.
And it’s somewhat encouraging that detractors, while still calling for at least a 50/50 split, have not yet convened news conferences to denounce the proposals. That doesn’t mean they accept 75/25, but it’s an indication that big-dividend advocates are losing strength. Freshmen comprise one-third of this year’s Legislature, and many of them can do the math.
Meanwhile, oil prices are losing strength, which is a big factor in how much the state budget can afford for a long list of needs — not just the PFD.
Cratering oil prices, down about 45% since last June, may help steer more lawmakers to the reality that the state can’t promise a PFD so big that the checks crowd out needed services, such as schools. Oil generally is the second-largest source of revenue for the state, after Permanent Fund earnings. It all goes into the same checkbook, and there is no overdraft protection.
The budget numbers tell us that legislators can’t fund a much-needed increase in state spending on schools, rebuild the university system and state ferry fleet and fix all the roads if one-third of all general fund dollars go to the dividend, as Gov. Mike Dunleavy proposes with a PFD that would be three times the size of the 75/25 plan. His arithmetic is based on non-existent state revenues, taking more money out of the state’s dwindling savings, and ignoring needs for community services.
The math of the 75/25 plan works, providing enough money for schools, community projects and a reasonable PFD. The numbers add up.
Reader Comments(0)