Gov. Mike Dunleavy renewed his position on Wednesday on one of his signature issues since his campaign: paying back the amount cut from the last few years’ permanent fund dividends.
But the proposal faces skepticism in the Legislature.
A bill introduced at Dunleavy’s request on Wednesday would pay $1,304 to every eligible Alaskan. That’s the difference between what would be paid under the dividend formula in a 1982 state law and how much the state actually paid in PFDs last October.
This is on top of last year’s request to pay back the PFD amounts cut in 2016, 2017 and 2018. Altogether, the state would spend roughly $3 billion from the Alaska Permanent Fund’s earnings reserve. That’s nearly a third of all of the money scheduled to be left in the reserve by June.
Dunleavy said he understands there’s concern about spending down the earnings reserve. But he said the state should follow the law.
“What this language in this bill does is merely, once again, follow the statutes on the books, the laws on the books,” Dunleavy said.
Lawmakers have proposed changing the dividend formula. And Dunleavy said he wants to engage in discussions about what the PFD will be in the future. But he said that doesn’t change what Alaskans should receive under the current law.
“The money is sitting there. The statutes are there,” he said. “We’re merely saying, bring the money together with the statues, and let’s follow the statutes.”
Last year’s bill to pay back the three previous years of PFD cuts hasn’t been passed by either chamber. And even some staunch defenders of Dunleavy aren’t enthusiastic about the payback idea at this point.
Anchorage Republican Rep. Lance Pruitt, the House minority leader, said last week that Alaskans are looking forward, and that paying the money back now wouldn’t make up for any boost to the state’s economy that would have happened with full dividends during the recession.
“Here we are, four years into it, and the economic benefit that would have come four years ago would not be seen today,” said Pruitt, who emphasized that he was speaking for himself. “I mean, we’re four years past that.”
Pruitt said removing more money from the earnings reserve wouldn’t serve the state in the long term.
“Most Alaskans have come to the idea of, you know, whatever happened then, happened then, and what are we doing about today,” he said.
Leadership in both chambers deeply resists the idea of depleting the permanent fund earnings. They note drawing more from the earnings would violate a state law that limits the annual draw to roughly 5% of the fund’s overall value, currently $67 billion, including both the fund’s constitutionally protected principal and its earnings account.
Dillingham independent House Speaker Bryce Edgmon said the Legislature has already dipped into savings the past two years in order to pay $1,600 dividends.
“And most of us, you know, support as big a PFD as we can possibly get,” he said. “But at the same time, the question about how to pay for it is one that’s going to land at the doorstep of the Legislature before too long. And we’re going to have to really figure something out.”
Anchorage Republican Senate President Cathy Giessel said every senator supports paying dividends.
“But we are not the federal government. We cannot print money,” she said. “We have a limited amount of money. We have services that are critically needed: We have education that is mandated in our constitution to be supplied by government. We will do what we can, but we will not put this state in a precarious financial position.”
And Fairbanks Republican Sen. Click Bishop said spending down the permanent fund earnings threatens the state’s future.
He said the fund was intended to serve future generations using a wellspring that’s served past and current generations: the trans-Alaska pipeline system, or TAPS.
“I had a good run in my working career in Alaska. Caught TAPS at the beginning,” Bishop said. “We’ve all reaped the benefit of TAPS and what oil royalties have done for the state of Alaska. I want to protect the future for my children, grandchildren and future generations of Alaskans.”
The House and Senate versions of the new bill — House Bill 259 and Senate Bill 205 — were referred to the finance committees in each chamber.