Alaska House votes down $3,000 Permanent Fund dividend

JUNEAU — The Alaska House of Representatives has voted against a $3,000 Permanent Fund dividend paid using the traditional formula in state law.

While the Alaska Senate has repeatedly voted on the amount of this year’s dividend (first for a traditional dividend, then against it), this is the first time the House has done so. The issue arose as a proposed amendment to the state’s capital construction and renovation budget, which passed the House later in the day.

With the failure of Wednesday’s vote 15-21, the issue will be addressed in another special session. Gov. Mike Dunleavy reiterated after the vote that he believes legislators have not finished their work for the year until they approve a $3,000 dividend.

“If anyone thinks we’re not going to come back into another special session and address the dividend, here’s a news flash: We’re going to do that,” said Rep. John Lincoln, D-Kotzebue.

The Permanent Fund dividend payment formula has been mostly unchanged since 1982, but two significant events in the past two years have changed the way some lawmakers approach the dividend.

In 2017, the Alaska Supreme Court ruled that the dividend is subject to the state’s annual budget process, just like other spending.

“Absent another constitutional amendment, the Permanent Fund dividend program must compete for annual legislative funding just as other state programs,” Justice Daniel Winfree said at the time.

One year later, lawmakers approved Senate Bill 26, which sets up an annual transfer from the Permanent Fund to the state treasury. That transfer can be used for state services or dividends, but SB 26 prohibits lawmakers from spending more than the transfer.

For lawmakers, that’s a problem this year because the transfer — added to other state taxes — is not enough to pay for both the operating budget (as currently written) and a traditional dividend.

On Wednesday, Rep. David Talerico, R-Healy, proposed a capital budget amendment that would have required spending $1.9 billion from the earnings reserve of the Alaska Permanent Fund on a dividend.

This amount would violate the SB 26 limits, but Talerico said the traditional dividend is an obligation.

“We owe it to the citizens of the state of Alaska,” he said.

Rep. Andy Josephson, D-Anchorage, was the first to speak in opposition.

“This is bad policy. It results in compliance with one law and defiance of another,” he said. “It is a liberal draw on the Permanent Fund earnings reserve. It is an unsustainable draw.”

Under SB 26, spending from the earnings reserve is to be limited to less than what the fund can generate from its investments under most scenarios.

“I would much rather step in front of a freight train than spend down the Permanent Fund unsustainably,” said Rep. Jonathan Kreiss-Tomkins, D-Sitka.

Several lawmakers, both for and against the amendment, said they might be amenable to changes in the Permanent Fund dividend formula later, but for now, the law prescribes what should be paid.

“I think in the meantime, we have a fiduciary responsibility to the people of Alaska,” said Rep. Josh Revak, R-Anchorage.

Many of those speaking in favor of the traditional dividend formula made a case for economic fairness.

Rep. David Eastman, R-Wasilla, said a cut to the Permanent Fund dividend is a tax on Alaskans.

Because a dividend cut would take the same amount of money from an Alaskan who earns $30,000 per year as a millionaire, it acts as a regressive income tax, taking proportionally more from the poor than the rich.

“I’m really loath to put the entire cost of this fiscal crisis on some of the poorest constituents in this state,” said Rep. Gabrielle LeDoux, R-Anchorage.

Rep. Tiffany Zulkosky, D-Bethel, represents the second-poorest statehouse district in Alaska, according to statistics from the U.S. Census Bureau’s American Community Survey. She pushed back against those arguments, saying the alternative to cutting dividends is cutting services, and that is worse.

“I represent one of the most economically disadvantaged areas of the state, (with) some of the most limited economic opportunities, so the Permanent Fund dividend is critical. It’s essential, but so are state services,” she said.

“These are cuts that don’t just cause harm. They compound harm,” she said of cuts to services.

Rep. Sarah Vance, R-Homer, said a traditional dividend would amount to an economic stimulus for communities across the state. She said that stimulus would be particularly strong for poor Alaskans.

“Why are we afraid to infuse Alaska with their own money, to be used for their own needs? They know their needs better than anybody else,” she asked.