THE OPENING BID FOR THE PFD IS $1,600, BUT LIKELY TO BE AMENDED
Senate Bill 1002, Permanent Fund dividend payout legislation, was the subject of thoughtful discussion in Senate Rules Committee today, before being sent to the Senate Floor for consideration on Tuesday’s calendar.
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.
Gov. Michael Dunleavy has said that the statutory formula for the dividend would mean $3,000 dividends this year, but some senators and House members are saying that, considering the State’s fiscal situation, that is unwise.
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.
Stedman, who is co-chair of Finance, wants to stay out of the Earnings Reserve Account of the Permanent Fund, because dipping into that fund would, for one thing, send a signal to Permanent Fund managers that the Legislature is coming after the account, and then managers would have to invest with that in mind; they’d hoard more cash and change their investment targets and asset allocation modeling to adjust to a potential raid on the fund, or “cash call,” as Stedman put it.
Legislators passed SB 26 last year, which makes a “structured draw,” or a set draw on the earnings of the Permanent Fund of 5.25 percent this year and 5 percent in subsequent years. That is in statute, Stedman explained. He also acknowledged there is a another Alaska Statute that addresses how Permanent Fund dividends are to be calculated, and that statute would set this year’s check at $3,000. “Its common for people to talk about one statute and ignore the other,” Stedman said, acknowledging that there are two statutes in conflict with each other.
General fund operating budget is $4.4 billion this year, not counting the dividend. The dividend at $1,600 represents one quarter of all other obligations, Stedman said.
The discussion will continue on the Senate Floor tomorrow when the bill is brought back. All members of the Rules Committee signed to move it to the floor, with Sen. Mia Costello the only one recommending changes.
If the $1,600 dividend passed both bodies, it’s likely the governor will veto it, along with other spending, and ask the Legislature to come back into session to try again.
“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 Gov. 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,” his office said in a press release.
“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.
Next year’s house races can’t come soon enough.
These “representatives and senators” can’t seem to get over the idea that the PFD is the PFD. The “formula” for paying the dividend has been front and center since it’s inception. Until walker and cronies, that is. After the four year walker fiasco, the dims think everything belongs to the socialist/lib faction and to the devil with the citizens of Alaska. Amazing to me how they can justify, in their seemingly tiny minds, this approach. Spend within our means. That doesn’t mean within the “means” of asea and the lib/socialist agenda the dims are pushing, with everyone else’s money going to that select group of like associates. The puerile antics of the dims are almost comic, but even comics have to deal with reality, to a degree. The next election will be super critical to Alaska and Alaskans.
The PFD money is not for balancing your budget because you can’t live withing the guide lines. you take our PFD we cut your jobs at the poll’s. Learn to budget your money or we will vote someone who can into your job. Plain and simple. You have been warned do not ignore the people of Alaska any longer without us we don’t need you.
Dunleavy is correct. Let the voters decide.
It’s time us Alaskan vote out the greed pigs and let the new members know HANDS OFF PFD.. or you will be gone too..
Bring their sorry arses to the Valley! I want to see them face the people; especially all those tax and spend so-called Republicans.
I am a UAA employee and I am in favor of taking all your PFD’s to pay for my benefits package and fund my retirement.
LMAO!
This is a GREAT line. I may use it for testimony. Something like, “Good Day Committee members, thank you for this opportunity. I’d like to compliment those with whom I disagree and give them the honor of mimicking them. You see I am a UAA employee and I am in favor of taking everyone’s PFD’s so that all education employees throughout the state can continue to pay for my benefits package and fund my retirement.”
If the managers of the Permanent Fund start playing games because the Legislature might tap some of the Earnings Reserve, those managers are probably violating their professional obligations to the State and should be fired with extreme prejudice. Alaska’s version of the Deep State does not run things – at least not yet. If this is a realistic scenario with the PF managers, they should be terminated as a precautionary measure. The managers are employees, not stakeholders. The PF and the Earnings Reserve do NOT belong to the managers; the money belongs to the State and is subject to management and distribution in accordance with the Constitution and the statutes.
Bert showing his true colors. Government is the all-provider
If times sre tough why can’t the State suck it up
I’m sure they’ll do just fine.
I sure wish we could elect representatives who represent We The People instead of people who think this is their own fiefdom. It’s amazing there are so many BIG GOVERNMENT politicians in this state.
Please check your math. First, the $1600 dividend is not 1.71 Billion, it’s 1.07 Billion, for sure. Next, a UGF spend of 4.4 billion is in the ball park, but the PFD is not part of that, or 1/4 as the article says. PF Earnings can go into the General Fund, with 2.9 billion coming from the 5.25% draw. The Gov’s budget shows 4.65 Billion in Revenue for expenditures with (1) Billion coming from the PF Earnings. There is no dividend in that amount. Accuracy is important !
You’re right on the first one, and I appreciate it, and that typo is corrected. Bert Stedman is the source for the second one, and I could have written the third one more carefully, because the PFD represents 1/4 but is in addition to the Legislature’s version of the budget. That said, I appreciate your note and careful reading!
We voted in the past to move the capitol out of Juneau and get it closer to the main population of Alaska. We need to make this happen NOW!! At the same time we have to change the constituency of our legislature. Let them know they work for us, not the other way around.
Unfortunately, not being able to afford the PFD is and has been the Legislative Big Lie since 2015. The money doesn’t come from any government monies or “revenue” (taxes, fees and fines). EXCEPT this year they ARE taking the money from budgeted items and savings.
Of course, as she did when Governor Walker wanted all the money, this action will allow the CEO of the Permanent Fund to keep any funds that would have gone to the PFD. When there is no distribution, it has been established that the PF Corp. does not distribute funds deliverable, by their corporate bylaws to the People of Alaska, to the Governmental Body. The whole Permanent Fund is about controlling and supporting necessary governmental spending.
The law is still a distribution from the Permanent Fund Earnings as a PFD and ERA split (not the Corpus [big statewide bag of $60+ Billion] or the Earning Reserve Account [little legislative bag of $19 Billion]).
We really need to leash these legislators in. Our minions (the legislators) are running the business and their employers (us) have not been reigning them in. We need to reprimand (most of them), recall (as in Knopp) and primary them out.
Bert Stedman, cronie at work…… The PFD is to be left alone and the budget as proposed by Dunleavy needs to be used. Let the departments and programs shrink to a level that is healthy and not cumbersome and out of control. Go through the budget line by line and just cut the junk…
So the legislature, particularly Sen. Stedman, want to protect the fund managers from potential cash calls. What about the people of Alaska? Shouldn’t the legislature, and Sen. Stedman, consider us before the fund managers?
This is a great example for why the legislature should meet on the road system. Juneau represents a retreat in a remote location. Instead of input from fellow citizens our elected officials are being schmoozed by lobbyists. The result is less and less what voters want.
Actually, with Gavel Alaska the voters can watch in real time what is going on in Juneau. That would not be possible in any other location.
Naturally, if the outcome is something other than what voters want they (voters) will know exactly whom to blame if they are watching the sausage being made.
I haven’t owned or watched TV in 30 years, but thanks for that.
You should suggest to the other states, citing Alaska’s superior outcomes, that they have their legislators retreat to a remote location for sausage making.
Evidently you aren’t aware that Gavel, Alaska is viewable on your computer-it may be available on TV but I’m getting it live on my desktop.
Just google “Gavel Alaska” to see which various committee meetings are meeting, and when. Anyway, even you can learn something every day.
Bill,
The technology for Gavel Alaska ca only be used in Juneau, does it not work anywhere else in the world?
Gavel Alaska is a program funded by Juneau to give access to Alaskans. Nothing would prohibit another community from doing something similar as the technology would work anywhere. You can see where Juneau would be reluctant to fund it for another community.
I was shocked to learn that 7 Republican and 1 democrat voted against a full PFD. I called every one of them today and told them they better change their vote or else they can go look for a new job next election. It is insane for the legislature to think they can steal 1/2 of our money for their pet projects. We as Alaskans will not stand for these strong arm tactics. Especially because it was perpetrated by the Republican Senators. What is wrong with the.? Do they really want to submit themselves to the wrath of the Alaskan voters??
My guess is you are not the only one shocked about these Republicans not wanting a full PFD. My own feeling are that this is due to them (Rs) not wanting an income tax to fund future govt. programs.
They do have an argument for a full PFD forcing the ERA funds over the 5.25% limit imposed on by a recent POMV adopted last session by many of these same Senators. No matter how it is sliced, one statute or another will most likely be violated (statutory PFD law, or SB 26 that gave us POMV).
The Bill Walker approach to the PFD dividend payout: Cut it in half. And we all know how that worked out for old Bill.
I am a long time Republican. It makes me sick that these R senators want to cut the pfd. Sick enough that I will sign up to go to the next R convention…again. I want to personally talk to every single one of them.
The Republican Convention is the last place you can find them. Rarely do they attend.
All districts that have a voter from the senate and house that do not want the whole PFD to go to the legal resident, should be on a recall list. The districts need to start taking that responsibility seriously. Wasilla, Palmer, Anchorage and Kenai along with Fairbanks and Southeast communities and Northern districts get your list together and start working it for signatures. Time to finish the problem, talk is over and action needs to be a part of a good government. These stupid, smiling cronies need to go! They have done more harm than good and its time to dump the individuals that will not perform for the districts and the requests of the voters.
Wasilla has Representative Colleen Sullivan-Leonard and Senator David Wilson working for their constituents – they are appreciated very much. Palmer has Rep. DeLena Johnson and Senator Shelley Hughes working for their constituents – they are appreciated very much.
Other hard working folks who represent the Matanuska-Susitna communities are working just as hard and voting as their constituents desire incude: Rep. George Rauscher, Rep. David Eastman and my wonderful representative Rep. Cathy Tilton. In the Senate we have just as much reliability in the commitments and convictions of Senator Shelley Hughes and Senator David Wilson.
Anybody wanting to come to the Mat-Su to interact with your legislative representation, please do! We’ll be celebrating having our legislators here during the next special session.
If you break a law, you are then a criminal, and not eligible to be in the legislature. If the amount of money involved is, I believe $5000, that is considered to be a felony, multiply that by 700,000 Alaskans, and you could spend decades in jail. If you are in the legislature, and do not follow the law, as written, you should then be brought up on charges. No one is above the law, not even those in the house or senate. How can they think they can force the Governor to break the law, after they have already done it, are they trying to make the Governor their patsy????
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