Gov. Dunleavy said the Legislature didn’t do its job when it settled for a $525 Permanent Fund dividend for Alaskans.

Thus, he made a bold move and zeroed it out from the 2022 budget. He said he expects the Legislature to return in August and come up with something more fair.

Earlier this year, Dunleavy proposed a “50/50” Permanent Fund constitutional amendment that would guarantee Alaskans receive their share of the State’s resource wealth each year, he reminded the press today.

Under the 50/50 PFD proposal, money spent from the Permanent Fund would be equally split between the people and government. That would mean $2,350 for each eligible Alaskan this year.

That proposal was given almost no consideration by the Legislature.

The Legislature instead reduced the PFD to $1,100, but more than half of that was contingent on a 3/4 Constitutional Budget Reserve vote by members of the Legislature. When that vote failed, the PFD was cut to $525.

“Even though the Permanent Fund returned record-setting investment earnings this year, the Legislature’s $525 PFD is the lowest amount in history when accounting for inflation,” he said.

As the pandemic fades and many Alaskans continue the uphill climb toward financial recovery, the Legislature’s record-low PFD is not a serious proposition and only advances the agenda of those who wish to eliminate the PFD forever, he said.

Gov. Dunleavy said he understand the significance of vetoing the PFD and is committed to calling on the Legislature this August “to do right by the people and pass a legitimate PFD for Alaskans.”

The $525 dividend passed by the Legislature happened when pro-statutory dividend legislators put their foot down and refused to be bullied into accepting the $1,100 dividend, because the statutory amount sets it closer to $3,500 for every qualifying person in Alaska.

$525 is just 12 percent of the allowable Earnings Reserve Account draw. The draw is subject to appropriation and is set in statute at 5% from fiscal year 2022 onward under rules established in FY 2019.

The cuts Dunleavy made are to many positions that are unfilled or where people have retired from state service. He said no one working for the state will lost their jobs due to the cuts, and he prioritized public safety and justice.

He also cut many capital projects, including ones he had proposed, because he said his proposal was tied to a bond proposal he made to the Legislature that didn’t pass.

Still, the capital budget is the largest one since 2014.

Other details of the final budget include:

• Removes hundreds of unfilled and unneeded vacant positions in state government added by the House and Senate Finance Committees.
• Increases funding for public safety and programs to reduce domestic violence and sexual assault.
• Establishes an 18-month schedule for the Alaska Marine Highway System. 
• Protects education funding.
• Funds the largest capital budget since 2014, creating jobs, infrastructure and economic opportunity.
• Creates the Statehood Defense Fund to defend Alaska from federal intrusion to halt natural resource production and take away our Second Amendment rights.
• Preserves general fund dollars by asking local governments, school districts and other entities use the millions in federal relief funds they already have.
• Directs the Alaska Mental Health Trust Authority to pay for new programs and services with its own assets – those programs were improperly funded with state revenue
• Vetoes $2.0 million in per diem for the Alaska Legislature’s FY 22 budget. Lawmakers need to finish the work on protections for the permanent fund and the PFD before paying themselves. 
• The total FY 22 operating budget is $4.0 billion, a reduction of $450 million, or a 10% reduction from the FY 21 budget. 

“The Legislature met its constitutional duty to avoid a shutdown, but we still have a lot of work to do because the budget remains incomplete. I look forward to sitting down with lawmakers during the upcoming special session to get Alaskans a fair and sizable PFD that reflects my 50/50 proposal, pass a constitutional amendment that, if approved by voters, will settle the PFD debate once and for all and see if they can muster the votes to pass the CBR reverse sweep so important programs like university scholarships are properly funded,” Dunleavy said.  

Update: Gov. Dunleavy said the $525 PFD is a “slap in the face” of Alaskans and represents the lowest PFD in Alaska history, when considering inflation. “This $500 was just picked out of the air,” he said, adding that all Alaskans understand that legislators making $5,000 a month in per diem in the special session and still not paying Alaskans their fair dividend is wrong.

“Government is well funded right now but many Alaskans are struggling with the fallout from this pandemic,” he said.

This story will be updated. There is much more information coming out that we’ll sort through today.