Alaska House committee set to hear public input on Permanent Fund dividend overhaul proposals

The House Ways and Means committee is scheduled to hear public testimony Saturday morning regarding several competing bills to address the way the Permanent Fund dividend is calculated each year.

Until 2016, the dividend size was calculated each year by dividing the amount available for distribution from the Permanent Fund earnings account by the number of eligible Alaskans.

But lawmakers since 2016 have not been following that statute, instead using part of that money to pay for government services after oil revenue plummeted, leaving the state dependent on revenue from the Permanent Fund to make up the difference.

Since then, Alaskans have faced uncertainty about the annual size of the dividend as lawmakers have argued over its calculation.

During his time in office, Gov. Mike Dunleavy’s position on the dividend has wavered even as he has made the promise of large dividends hallmarks of his two gubernatorial campaigns. Early in his first term, he called for a full statutory dividend. In 2021, he called for dividing the Permanent Fund’s earnings equally between the dividend and state services. But when oil revenue shot up unexpectedly in 2022, in part because of Russia’s war against Ukraine, Dunleavy abandoned his push for what had been dubbed the “50-50 plan” in favor of providing one of the largest dividends in state history, months before he was up for reelection.

This year, Dunleavy again proposed a full statutory dividend — which would amount to around $3,900, and leave the state with a roughly $500 million deficit and without the funds to cover other proposed policies with large price tags.

The governor’s proposal has been deemed unrealistic by leaders of the bipartisan Senate majority, who say such a large dividend won’t leave enough money to adequately fund the state’s constitutionally mandated responsibilities, including public education. But Senate members have so far taken a back seat on the conversation about how to calculate the dividend this year and in the future.

In the meantime, leaders of the Alaska House majority — made up of mostly Republicans — have also so far refrained from siding with a particular plan for dealing with the dividend, and instead relegated the question to the Ways and Mean Committee, a group of lawmakers separate from the more powerful Finance Committee that crafts that annual state budget.

House Ways and Means Committee Chair Ben Carpenter, R-Nikiski, has promised to examine different measures to address the state’s long-term fiscal plan, including passing a new law to more strictly cap the state’s annual spending. But the bulk of the proposals heard by the committee so far have provided competing mechanisms for calculating the annual dividend.

One would set the dividend amount at one-quarter of earnings from the Permanent Fund; another would limit the dividend to $1,000 or less; and yet another would change the Alaska Constitution to guarantee the dividend size is at least as large as what is promised in the existing statute.

Most of these solutions are familiar to lawmakers. In the years since the Legislature abandoned the existing statute, they have cycled through various ideas for dividend reform, but have so far failed to find a solution with broad enough support. There is little to indicate that the Legislature can agree on any of the proposals for new dividend formulas proposed so far, because none have bipartisan support.

Those who favor a smaller dividend, like Rep. Dan Ortiz, I-Ketchikan, who introduced the measure that would cap the dividend at 25% of the Permanent Fund earnings, and Rep. Zack Fields, D-Anchorage, who proposed the $1,000 dividend limit, say that limiting the size of the dividend will ensure the dividend is available for years to come while also applying Permanent Fund earnings to cover state services without increasing taxes.

Those who favor larger dividends, like Carpenter and other Republican members of the House Ways and Means Committee, say they are hoping for economic growth that would make the payouts affordable to the state.

But disagreements between committee members hint at the roadblocks that await any effort to pass new laws applying to the dividend.

“Are you suggesting that because we have perhaps bad roads, a horrible education system, that we swipe individuals’ PFD before cutting the budget?” asked Rep. Jamie Allard, R-Eagle River, during a recent meeting. She directed the question at Rep. Cliff Groh, D-Anchorage, who favors a smaller dividend.

“No. I’d like to tax my former dentist,” Groh replied. “I’d like to look out for those who make $20 or $25 an hour despite the substantial pressures from other people, who say, ‘Cliff, you’ve got to look out for the interests of people who make $2,000 an hour.’”

The public hearing to discuss the existing proposals is set for 9 a.m. Saturday in Juneau. To testify, individuals can call in at 907-465-4648.