The Alaska Permanent Fund Dividend has been calculated in a nonpolitical formula by tradition since the first checks were cut in 1982. The amount of dividends was always tied to the actual performance of the Permanent Fund.
But when Gov. Bill Walker sliced the dividend in half in 2016, he changed the course of Alaska history. The Permanent Fund Dividend can now be used as a blunt political instrument.
The Alaska Supreme Court on Friday upheld Walker’s right to veto the dividend. In a unanimous decision, the court discarded the arguments made by Democrat Sen. Bill Wielechowski, and former Republican Sens. Rick Halford and Clem Tillion, who had sued the governor.
The judges said that the dividend is like any other appropriation in the budget, which makes it subject to veto. Walker set last year’s dividend at $1022, when normally Alaskans would have received more than $2,050, due to the strength of the fund, which is now worth over $60 billion.
The cut took $650 million out of Alaskans’ wallets in 2016 but the dividend was close to the historical average for dividends, which is $1,150.
This year the Legislature did the cut for him, by setting the amount at $1,100. Alaskans who qualify will receive their checks the first week of October.
The argument made by Wielechowski, Halford, and Tillion was that the 1976 constitutional amendment creating the Permanent Fund gave lawmakers constitutional authority to pass laws dedicating use of fund’s income without need for annual appropriations. Therefore, because the dividend is unlike other appropriations, it is not subject to a gubernatorial veto.
But judges said that even if the constitutional amendment gave the legislature dedication powers over the dividend, the matter is part of the normal appropriation and veto processes that govern the budget.
“We conclude that Governor Walker validly exercised his constitutional veto authority when reducing the transfer amount from the earnings reserve to the dividend fund,” the judges wrote.
THE DANGER WITH THE DECISION
Amy Demboski, who hosts a conservative talk show on KVNT, cautioned, “Well, there you have it. Your PFD will forever more be subject to the political whim of the Legislature and governor. The only way to protect it is a constitutional amendment.”
Sen. Mike Dunleavy, a Republican candidate for governor, has been calling for a constitutional amendment for a while, and he left the Senate Republican majority caucus earlier this because he disagreed with his fellow Republicans over their decision to set the dividend lower than it would be if calculated in the traditional method.
“We need to constitutionalize the Permanent Fund Dividend, sooner, rather than later,” he said today. “That was overlooked when they constitutionalized the Permanent Fund. If we don’t do this, the politicians will spend all that money in the blink of an eye. This coming session, like-minded people will need to work together to protect the dividend for future generations.”