Governor Dunleavy Responds to Senate Bill to Cut PFD

Monday, June 3, 2019 (Anchorage) – Alaska Governor Michael J. Dunleavy today issued a statement in response to SB 1002, a bill put forth by the Senate to disregard the statutory formula of the Permanent Fund Dividend and arbitrarily provide for a $1,600 dividend.

“This bill kills the Permanent Fund Dividend as we know it. The PFD is your share of Alaska’s mineral wealth, and there should be no change to the dividend without a vote of the people,” said Governor Dunleavy. “That’s what I promised on the campaign and that’s the promise I intend to keep. I cannot and will not support this legislation.”

SB 1002 severs the dividend from the Earnings Reserve Account and market activities, and further dismisses the statutory formula of the dividend that has been in place for nearly 40 years. As proposed, the legislation ignores longstanding laws and overwhelming public support for a full PFD. Alaskans have been diligent in providing testimony and urging the legislature to stop using the Permanent Fund as a political piggy bank to support a larger government.

“Let me be clear, this is a non-starter. If passed, I will veto SB 1002. I encourage an amendment that would restore a full PFD to the people. Follow the law— that’s what Alaskans have demanded and deserve,” said Governor Dunleavy.

Must Read Alaska wrote an article showing responses from the Senate explaining why Alaskans should have their full PFD [read the full here]:

Sen. Bert Stedman of Sitka drew the short straw to explain how that number was reached, where the funds would come from, and the rationale behind it.

Last year’s dividend was $1,600, he explained. Lawmakers just didn’t want to go lower than last year. “There is no magic to the $1,600,” he said, other than the sense that the previous amount under discussion — $1,200 — was too low. [...]

Stedman pointed out that the vast majority of the committee was born in Alaska, and some before Statehood, and they grew up during a time before oil, when “times were tough, but they survived just fine.”

Then oil started flowing: “We lived in a very fruitful time period,” he said, and the oil revenues made a lot of improvements to Alaska to bring it up to on par with the rest of the United States.

“We set aside $60-65 billion. If we now devour our current revenue and start eating our seed capital, we’re hurting our descendants,” Stedman explained.

SB 1002 proposes three funding sources for paying the $1.07 billion payout for the dividend, and none of those sources are eating into the Earnings Reserve Account: $770 million would come from the General Fund, $172 million would come from the Statutory Budget Reserve, draining that account, and $128 million would come from the Higher Education Fund, although the amount would change depending on how many Alaskans end up qualifying for this year’s dividend.

The way Stedman explains it: All funds are General Funds, which comes from taxes on resources, mainly oil extraction. Lawmakers can’t separate out one dollar from another, and only pay dividends from exact dollars that come from oil wealth. The funds are comingled.