A rational solution for the dividend program

By
Suzanne Downing
-
36

By TOM WILLIAMS
GUEST CONTRIBUTOR

To solve the deadlock over the 2019 Permanent Fund dividend amount and the FY 2020 state education budget, the Legislature and the governor should agree to legislation during the upcoming second special session that would do four things:

  1. Modify the criteria for a Permanent Fund dividend, limiting payments to only adult Alaskan residents who are U.S. citizens eligible to vote in Alaska who have not been absent from Alaska for more than 90 days in the prior calendar year;
  2. Multiply the calculation formula for the dividend by a factor of 72 percent, the percentage of 2017 eligible applicants who would meet the new eligibility criteria;
  3. Appropriate the amount calculated under the revised eligibility formula to those 2019 applicants who qualify under the revised formula; and
  4. Repeal the “forward funding” appropriation for the 2020 education budget enacted during the 2018 legislative session and replace it with a current appropriation for the 2020 education budget from the earnings reserve account of the Permanent Fund.

This solution would:

  1. Return the dividend amount to the current statutory calculation for eligible Alaskan voters who were present in Alaska for at least three-quarters of the eligibility year, providing eligible Alaskans a “full’ dividend consistent with the original PFD program;
  2. Retain a significant vested interest for voters to protect the Permanent Fund from being raided by our politicians, an original intent of the PFD program;
  3. Avoid sending money to people who spend a significant amount of time outside of Alaska, regardless of the reason, thereby improving the likelihood that most PFD payments will be spent in the Alaskan economy where they will have the most local impact;
  4. Significantly reduce the cost of administering the PFD program;
  5. Direct the amount of the PFD’s that would have been otherwise paid to children toward the cost of their education, or other child related programs, and thereby avoid paying dividends to children while using other scarce funds to pay for their education; and
  6. Avoid a costly and time-consuming court battle over the question of forward funding programs like the education budget, while adequately funding the 2020 education budget.

So how much money paid for children’s dividends could be re-directed to their education or other children services?  Using the most recent information published by the PFD division in their 2017 Annual Report, 175,207 children were eligible for a 2017 PFD, resulting in a payout of just under $193 million at the $1,100 reduced amount.

If the $2,389 statutory amount had been paid in 2017, over $418 million would have been paid to children.  Those funds could have been directed toward funding the education budget, school bond debt reimbursement or other children’s programs.

This solution strikes a rational balance between the need for the PFD program and the need to use earnings from the Permanent Fund to help fund basic government services.

Tom Williams of Juneau is a 42-year resident of Alaska. He’s worked for aviation-related companies for the past 19 years, was director of two Department of Revenue divisions, including the Permanent Fund Dividend Division, and served on the staff of the Senate Finance and Legislative Budget and Audit committees.