The Alaska’s Senate Finance Committee has proposed amending an existing law that the Legislature hasn’t followed in years for determining the Alaska Permanent Fund dividend.
In 2018-2019, the Legislature adopted by statute a mechanism called the “percent of market value,” in which the Permanent Fund earnings are used not just to pay dividends, but to also contribute to state government under a split set by formula.
But that calculation, called POMV for short, conflicts with a prior law that gave Alaskans 50% of the oil wealth in the way of dividends. The two laws have been in conflict, and the matter was never resolved.
The dividend is calculated by taking the average net income of the Permanent Fund over the past five years, applying the most recent statutory percentage to that amount, then dividing it by the number of eligible applicants in the state. The exact formula also includes things like past year obligations and the expenses of running the program.
Senate Bill 109, proposed by Sen. Lyman Hoffman of Bethel, gives Alaskans 25% rather than the 50% of the earlier statute, which hasn’t been followed since Gov. Bill Walker vetoed half of the dividend in 2015.
The new bill modifies the management and distribution of the Alaska Permanent Fund, including changes to how income is calculated, appropriated, and used for dividend payments.
Key provisions include:
- Fund Income Calculation: The bill updates the method for determining the Permanent Fund’s net income, basing it on generally accepted accounting principles while excluding unrealized gains and losses.
- Appropriation Limits: The annual amount available for appropriation is set at 5% of the fund’s average market value over the past five years, ensuring withdrawals do not exceed available reserves.
- Dividend Formula Adjustment: The allocation to the Permanent Fund Dividend (PFD) is reduced from 50% to 25% of the income available for appropriation.
- Inflation Protection: The legislature may appropriate funds from the earnings reserve account to offset inflation’s impact on the fund’s principal.
- Amerada Hess Settlement Funds: Income from the settlement remains in the fund but cannot be appropriated for general use, dividends, or inflation-proofing, instead going to the Alaska Capital Income Fund.
- Mental Health Trust Fund Exclusion: Earnings from this trust fund are not included in the Permanent Fund’s available income calculations.
- Repealed Provisions: Sections AS 37.13.145(e) and (f), which contained previous rules on fund transfers and allocations, are repealed.
Although the Legislature has been taking 75% for government, this year the Democrat-led majorities in the House and Senate want to add hundreds of millions of dollars in spending for education and pensions.
Even with 75% going to the state, there isn’t enough left. The current delta between spending demands and available revenues is estimated to be $500 million or more, according to the Legislative Finance Division.
The Yundt Tax may allay some of that deficit. Sen. Rob Yundt has proposed taxing Hilcorp, the company that manages the fields on the North Slope.
The Alaska Permanent Fund Dividend program began in 1983, when the Alaska Permanent Fund Corporation started distributing a portion of the fund’s earnings to Alaska residents. The PFD is paid out annually to all qualifying Alaska residents.
The Juneau Clown Show continues!
Fix? They’ve fixed enough.
I can hear the howling begin from 2200 miles away. A hugely unbalanced State budget, yet the greedy masses clamor for their free money before all else.
Funny thing is that when you were a “permanent” resident and checked the “yes” box on the old paper forms saying that you intended to stay in Alaska, you received the full statutory amount after its inception, till Walker killed it. Then you retired and moved away. I’d even bet that you used it in addition to any investments that you had/have making even more money.
That’s fine, you enjoyed the “good ol’days” and can exercise your 1st amendment rights from afar but rest assured, those of us that are here and have been experiencing the demolition of this state don’t care what you have to say.
On another note, were you aware of the fact that our state used to have an 80/20 rule? The one that said we get 80% of oil revenues and the producers got 20%? Yeah, the one that got changed to 50/50 back in the ‘90’s. And, the PFD was a way to share market investments from a part of that revenue with the citizens because we don’t have mineral rights.
So. Yes, we clamor to what is left because we don’t have good leadership and the only way our stewards, both state and federal only know/knew how to generate funding is to bring home the federal bacon. They never made a long term plan on how to make this great state become more than a colony.
Sorry Magnificent, facts won’t change their minds once they become emotionally attached to their delusions. Let’s go back to the 80/20 division of the revenue and quit fighting over the scraps left to us by our crooked legislators, some of whom were actually oil company employees while they were in the legislature.
Which U.S. states have balanced budgets?
By definition all of them do, as none of them can print money. How they get to the “balanced” point is another thing entirely. Cheers –
Texas does. And a multibillion dollar ” rainy day fund”
I agree. We really need to cut all funding for the NEA. Hold high Accountability standards for all government workers and include as much large learning model applications to erase the need for now defunct low-level government jobs.
Also end 33% of funding for UAA. Thank you.
All these elected dirtbag libs and RINO’s need to have their salaries cut to pay for their garbage bills. The witch from south Anchorage is the epitome of a parasite that looks for just to live off. Just a few years ago, she going to fight for it because took your money and she was going to work with our spineless Gov.. Now she wants it all and stop begging for it. She is nothing more than a power seeking trollop.
Yep, they could cut it by the 67% raise they accepted a couple years ago. What joke that was and their hands are clean because they didn’t know it was coming? Expecting our legislature to do the right thing is not only awkward it’s insane since they can’t even audit the taxes paid by the oil companies.
The money hungry politicians should not have gotten their hands on the PFD system from the start. It was set up to help Alaskans benefit somewhat from the oil resources being extracted from their state. Just like the federal government in DC and the SS system funded by hard working Americans the politicians just couldn’t let it be as ordinary structured and they stole from it and taxed the people who received it to fund their corruption. In both cases they should have just let it be as originally intended and we would all be better served.
You know when you file for office you have to declare on oath you’re telling the truth on your Declaration of candidacy…. Hoffman hasn’t lived in Bethel since 2015. He’s an Anchorage hillside Senator….
Every legislator in Juneau knows where Hoffman lives.
The Senate is an illegal body as long as they let Hoffman serve..
Why would or should we trust any of them with the States business when they can’t clean up their own illegalities???
Changing the calculation does not mean the legislature will adhere to it, but we can hope.
Also regarding the tundt tax – why not tax all of the other S corporations in Alaska?
I propose we pass the Zelensky law instead.
Juneau can have 100% of the dividend but all current reps and senators terms end on July 1,2025. No current rep or senator may run for public office for the next five election cycles.
The uni-party is coming after your PFD, they believe they know better than you on how to spend it. I smell the teachers unions in this. The majority of the bush and Anchorage voted for the PFD stealing democrats.
What is the Alaska Capital Income Fund?
Why are S Corporations taxed differently than other corporations?
Isn’t this the same way S Corporations are treated on federal taxes?
They do not adhere to the present law defining distributions what make any of us believe that they will with this new one. It time that the legislature did its job.
This represents exactly what governor Hammond was trying to prevent. He attempted to get part of the oil revenue to the people before the legislature could spend it all as the did with the original lease sales. This is the second step in the elimination of the dividend completely. That will in be coming in the future with the next rewrite of the law.
Reducing the dividend is a tax that is extremely unfair. The dividend reduction tax’s almost every child under the age of 11 at a very high rate because for most of them that is their only income.
They can’t vote so nobody cares about them
How about we just cut government spending and give us our FULL PFD!!! While were at it END all Property Taxes!!!
Many Alaska residents rely on the PFD to help pay for winter fuel bills, food, and other necessary expenses. Taking those funds (which are statutorily defined) is the equivalent of stealing someone’s horse, back in the Old West. As far as I’m concerned, unless the legislature gives us back our individual mineral rights, they had better stop stealing the PFD.
The legislators don’t pay attention to the current law that is on the books for calculating the Permanent Fund Dividend. So why does this one fix matter? It is all window dressing and they’ll soon be taking a future 90 (State)/10 (US) split saying the 75/25 is not enough to “balance” the bloated state budget (Capital & Operating).
Until people vote them out of office, expect more of the same down in Juneau. They got their raises for 120 “days” of work in Juneau and expect you to pay the de-facto tax from your share of the Permanent Fund earnings. The beatings will continue until morale improves.
The numbers tell the story. Alaska made a fatal mistake when SB-21 passed. We get way less for our oil, with a severance tax that approaches zero when credits (aka corporate welfare) are applied. The lies told to fleece Alaskans to steal our money through SB-21 are still believed by some Alaskans.
Gov. Walker did not support SB-21 but told Alaskans he’d adhere to their wishes on the referendum to overturn SB-21. Big Oil bought that election, and Walker inherited the disaster. Dividends have been cut ever since because we give away our oil. A family of four has now lost over $60,000.00 to the dividend amount not being followed by statute. That is a combined loss to Alaska of over $10 billion dollars.
But it gets worse. We can no longer fund our capital budgets properly. So our roads and buildings are not properly maintained. The money we’d need for future dividends will be lost, and legislators want Alaskans to pay an income tax and sales tax. All so we can subsidize the theft of our oil.
Big Oil is laughing at what suckers Alaskans are. Too weak, and ignorant to get a fair amount for the oil they own.
The numbers do tell the story. State spending ballooned under aces, it more than tripled in 6-7 years and the legislature continues to spend money as if oil was at record highs. Production under aces was showing a precipitous drop that was projected to continue to drop. The numbers do tell the story, in your continued disregard of the numbers no matter how long you go on about a system that was replaced by the legislature and voted on by the people over a decade ago to meet the constitutional mandate “for the maximum benefit of its people” regardless if you disagree with it or not, the numbers do matter.
Bill Walker, the worst governor in the history of the state, is the reason the dividend was cut. My guess is you have no idea what he did with the money that he singlehandedly took from every Alaskan. The fact that he did not support SB-21 tells any thinking Alaskan just about all they need to know…worst governor in state history.
If the legislature did their job none of this would be a problem, but they’d prefer to spend money and some people prefer to have government spend money because they believe government knows best how to spend money. There is no fiscal conservative anywhere that believes astronomically high levels of government spending is responsible. The reason the legislators are talking about income taxes is because they are addicted to spending other people’s money and they want more of it.
A more than tripling of state spending in 6-7 years, yep the numbers do in fact tell the story. The legislature has a spending problem.
Steve, you’d have a tiny bit of credibility if you tell us exactly what you would cut.
Go ahead.
Tell us.
How much would you cut from each department.
Put your big boy pants on and act like an adult.
I’ve already explained I’d cut $1.4 billion in corporate welfare to Big Oil. Every year.
See if you can match my cut.
M,
You can’t refute what I’ve said and the only retort you can manage is to insult and more gaslighting on your part. I’ll get back to you on your request when you start getting serious about the discussion.
What you’ve called for isn’t a cut. Call it what it is, you want to increase taxes so the state can spend more and more.
You really don’t understand what severance tax is do you? First you claim that Alaska has the lowest rate in the world and now you are claiming that it is close to zero and is welfare…is it zero or is it below zero? Pull out your dictionary and review what the words you are using actually mean. You realize the oil companies do in fact pay taxes, they do in fact pay royalty, and they do in fact fund our government…I know that you know this because you’ve acknowledged it in the past, so where is the disconnect?
Royalty isn’t taxes, Steve. We’ve covered this before.
Severance taxes are net, in Alaska. When deductions are made, they have in fact fallen below zero.
But you like corporate welfare. So what else is new Steve?
M,
When did severance taxes fall below zero, and exactly how did that happen? It couldn’t have been under SB-21 since the structure of the current tax system has a zero percent tax when oil is below $15 per barrel.
You still have yet to show where Alaska severance taxes are the lowest in the world, and now you are claiming that there’s what a severance credit?
I appreciate that you’ve stopped incorrectly using the word subsidy, it shows that you are able to take in information and apply it. The whole idea that not taxing something at rates that cause less production of that thing is somehow corporate welfare shows a disconnect from basic economics. You advocate for increasing taxes on the resources of this state that would not meet the constitutional mandate “for the maximum benefit of its people” you continue to advocate for a system that we know results in lower production and that ultimately results in lower state revenues.
There isn’t a state legislator that can do anything that will help.
They are all only looking for one thing!
What lie do I say to get re-elected.
I agree with Mia, why break a new promise you cant keep. Nobody wants to talk about the Conoco Phillips capital credits coming from Alpine, I understand $200 Million next year and $400 million the following year and then only capturing a 10% royalty rate. The PFD is going away soon anyway, let’s fund education and a defined benefit before everyone leaves.
Frank,
What are you proposing we fund education and defined benefits with? The Democrat Majority can’t or wo7 say what they want to fund education and defined benefits with, can you?
Why is it necessary to change the law on the books concerning the funds. 50/50. Fair enough. If the lawmakers feel that they need more funding for their pet projects, then it is time to tighten the belt in other areas. The time has come to stop taking something from the people that was fairly set up in the past and it should have been illegal to circumvent the initial funding agreement. 25% is a CYA type of agreement for what the legislature has been taking from the people concerning the State’s resources for the last few years. Push the line by line items of the State’s suggested budget to the people of the State and see what they feel is important and what is not. It is time the Alaska state budget get Doged!
I wonder how they justify themselves. If you can’t make ends meet financially you can’t just go divert half of your neighbor’s paycheck into your account, clearly breaking the law by stealing, then attempt to change the law so you can keep doing it. Meanwhile now your neighbor is really having a hard time because cost of everything is sky high and you took away from their already limited funds. Seems are government should be ashamed of themselves!
Steve, carry forward credits can push the severance rate below zero- and are used against future years.
Since we subsidize the infrastructure, but don’t take any ownership interest, this madness is a subsidy. And all of this is corporate welfare, which you support. So you aren’t serious about wanting to cut spending.
You must really want an income tax.
MM,
I get it now, anything that will slow or shutdown oil production is a subsidy, is corporate welfare, according to you. Getting more money for government so government can spend more is conservative, according to you. Wanting to cut government spending isn’t being serious about cutting government spending, according to you.
Like I said before your gaslighting is no longer an acceptable way to push your narrative. I know you think you are fooling people, but your not.
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