Governor’s budget strips fund that pays Permanent Fund Dividends




Gov. Bill Walker’s $6.06 billion operating budget (unrestricted and designated funds combined) uses the Alaska Permanent Fund Earnings Reserves Account (ERA) to pay for government operations.

This is a new condition that has raised some red flags among budget hawks.

The ERA has always been used to pay Alaskans their Permanent Fund Dividends and inflation-proof the corpus of the fund.

Walker’s budget relies on the use of the Permanent Fund by taking roughly $5 billion from the ERA within the Permanent Fund, leaving just $3 billion in the fund.

By stripping the ERA, the governor will tap close to 10 percent of the Permanent Fund’s entire value to pay for state operations for both FY 17 and FY18. This maneuver may be why his cuts to unrestricted general fund spending are a paltry 0.6 percent.

Senator Mike Dunleavy, a budget hawk from the Mat-Su & Copper River valleys, said that while the drawdown of the ERA may be legal, this also may be the biggest fund transfer in state history, and it comes with a budget that has minimal reductions in spending.

“The people of Alaska should be greatly concerned by a transfer of funds of this magnitude,” he said, adding that FY17’s budget is already paid for and did not need the injection of cash.

Appropriating funds from the Permanent Fund’s ERA into the general fund of the current year’s budget also is unusual because additions to current year budgets are normally done through a supplemental budget request for unexpected expenses.


The governor’s move to strip the Earnings Reserve Account may have another, more political goal.

If the Legislature has less money “available for appropriation” in the current year than what was appropriated in the previous year, the legislative majority can access the Constitutional Budget Reserve without a three-quarters vote. No super-majority is needed.

With the budget he has proposed that drains the ERA, the governor may be attempting to marginalize the House Republican Minority.

Since the ERA is technically available for appropriation, by stripping it of most of its money, the governor could set up the condition described in Article 9, 17b of the Alaska Constitution.

Walker will only need the Democrat-led House Majority and a compliant Senate majority. The minority in the House — the Republicans — could not withhold their support in order to get deeper budget cuts. The governor will have removed their leverage to downsize departments.

Last year, Governor Walker proposed rolling all the reserve accounts into the principal of the Permanent Fund, and then restructuring the fund entirely, under SB 128, to provide stable ongoing support for state services. That bill did not pass.

But his current budget proposal is, in essence, enacting portions of SB 128. Only this year, he’s moving money the opposite way — instead of moving all the funds into the Permanent Fund, he is moving nearly 10 percent out of it.

Our sources in the Capitol tell us that is precisely the governor’s thinking.

To what end?  Walker is keeping budget cuts to a minimum and maintaining spending at unsustainable levels by diverting 10 percent of the Permanent Fund.



  1. So if the governor does this for FY 17 and FY what does he do when the funds are gone? Guess then he will put in a state tax, then add in a sales tax, where will this end for this governor. Stripping the entire system if he stays in office very long.

    • Can you clean up your comment a little so I can approve it? Thank you for commenting — appreciate it.

  2. When Russia got greedy, they ended up having to sell Alaska. What this Governor is doing is stealing the money from the people. The Permanent Funds Earnings is what has helped to draw people to Alaska and has helped the permanent residents get through the winter. Those that don’t have jobs in the winter rely on the Funds to help them financially. How many will end up on Food Stamps or Welfare just to get by through those months??? This is not a good thing for the people of the State. It is just another greedy politician dipping his hands in a pot he needs to stay away from!!!!! He needs to go.

  3. This has been coming ever since the PFD was started for the people. Anytime there is a large sum of money for the politicians to take away from the people they won’t stop until their goal is accomplished. Their goal is to take it all. That is stolen money but yet they make it somehow legal. PFD should be distributed equal to the people & close, do away with the PFD. Years ago Alaska people voted against that when we was offered a one time payout of $25,000.00 each. This year the Governor made a decision to take , keep over 50% of our PFD. This coming year will it be & 70%? Just a thought.

  4. I hope the people who voted for him are happy.. The only way to solve the problem is vote him and all of his people out. He needs to get the gas line out of his mind. He can’t beat the lower 48 prices and they don’t need a pipeline.. Get AWNR open and develop more North Slope oil fields.. I don’t think he has a clue.. Of course he wasn’t left with much to work with…

  5. Just pay it out to everyone that is qualified to recieve the PFD & let the State spend theirs in 10 mins & then be droke! Their morons. We need to Vote NO on every bond, ect they want. No new schools! No new fire stations! No raises in the State offices! NO, NO, NO!

  6. Spineless politicians in Juneau except for Weilakowski. Sp? Yes, how can we stop him.
    I sure needed my dividend this year. Was so disappointed in Governor Walker and now this? He lost my respect.

  7. It has already been projected that the state will see about 7500 jobs LOST in 2017 and taking away the dividend of the long term residents of Alaska will bring us down to poverty even more than it did in 2016. Some families count on the dividend to pay for medical, housing, fuel and so on just to be able to live through the winter.
    Cut the wages of these politicians down to the minimum 9.75 hr and give them only the bare minimums of insurance. Have them walk in our shoes for the next year and see how we live just barely scraping by.

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