Alaska’s political leaders have steered clear of a vote on a Permanent Fund plan. They might get one anyway.

JUNEAU — Alaska lawmakers haven't yet approved legislation to use investment earnings from the $57 billion Permanent Fund to help cover the state's $3 billion deficit.

But discussions are already starting to bubble about a public vote to repeal such legislation, since it would likely result in smaller dividend checks than the record highs of recent years.

"There doesn't seem to be any thought that the voters could overturn that pretty easily. And then where are you at?" asked Bill Wielechowski, the Anchorage Democratic senator who's filed a lawsuit to overturn last year's partial veto of dividend checks by Gov. Bill Walker. "If the public feels it's unfair, there's absolutely no way you don't have a referendum."

Wielechowski already received a legal memo in January from the Legislature's attorney, Doug Gardner, saying that legislation to restructure the Permanent Fund would be subject to a referendum — a public vote to uphold or reject a bill passed by the Legislature.

Activists on the opposite side of the political spectrum from Wielechowski have also been exploring the potential of overturning such a law, going so far as discussions with a signature-gathering business.

"There are people like myself who are passionate about protecting the current structure of the Permanent Fund to our last breath — and last legal, political avenue," said Jon Faulkner, a Republican business owner from Homer and a member of a group opposed to dividend reductions called the Permanent Fund Defenders. "Whatever tools are at our disposal to pursue that within the law, we'll pursue."

Faulkner has already launched an effort to drive public opinion against changes to the Permanent Fund: $2,000 in radio ads featuring Clem Tillion, an old-time Alaska legislator who helped create the fund, who rails against what he calls an attempt to "steal your money."


A repeal campaign would face major logistical and financial obstacles, however. If a Permanent Fund bill passed this year, opponents would have to gather more than 30,000 signatures within 90 days of the Legislature's adjournment — including, in 30 of the state's 40 House districts, at least 7 percent of the number of people who voted in last year's election.

There's also no obvious source of cash for such an effort, with the state's big businesses lined up in support of proposals to restructure the Permanent Fund.

"Without the dough, it's probably not going to happen," said Scott Kohlhaas, the state's leading signature-gatherer, who has discussed the idea of a referendum with members of the Permanent Fund Defenders. "We've talked about the legal end of it. We've talked about the signature-gathering end of it. The money end of it, that's a big question mark."

A successful bid to place a referendum on the ballot, however, could pose a serious threat to efforts by Gov. Bill Walker and legislative leaders to stabilize the state's shaky finances.

Walker argues that the fund's earnings are the best source of cash to fill Alaska's deficit of nearly $3 billion, with other existing revenue only enough to cover about one-third of state spending. And now, five different proposals to restructure the fund are under consideration in Juneau — from Walker, from House and Senate leaders and from two Republican senators, Mike Dunleavy of Wasilla and Bert Stedman of Sitka.

A few lawmakers, including Dunleavy, have pushed for a public vote before such measures are adopted.

But those proposals haven't been embraced by Walker or legislative leaders, and they're not currently part of the Permanent Fund bills that have advanced through the House and Senate.

"I think it abrogates a little responsibility when, really, we were sent here by our district to make tough decisions," said Fairbanks Democratic Rep. Scott Kawasaki, a member of the House majority coalition. "I think it's the easy way out."

The last time Alaskans were asked if they supported spending Permanent Fund earnings on government services, in a 1999 advisory vote, the answer was a resounding "No": 83 percent were opposed.

"People think that number has changed. But I'll bet any legislator down there: If you put it on the ballot, the number's going to be the same as it was in '99," said Eddie Burke, a retired conservative radio host from Anchorage who worked on the successful side of the "no" campaign two decades ago.

Wielechowski and Stedman both said they think that legislation could withstand a referendum if it strikes the right balance in splitting the fund's cash between dividends and state services.

Walker's legislation, as originally proposed, combines 20 percent of the fund's investment earnings with about 15 percent of the state's royalty revenue to pay dividends, guaranteeing $1,000 checks for the next two years. The rest of the earnings would go to state government.

House leaders' legislation would use one-third of the earnings to pay dividends, estimated at $1,100, while the Senate leaders' bill would take one-fourth and pay at least $1,000 through 2020. Supporters have argued that a $1,000 dividend is in line with the historical average, even if it's about half the size of the payments in 2014 and 2015.

The 2016 check, after Walker vetoed half the money to pay for dividends, was $1,022.

The proposals from Dunleavy and Stedman, meanwhile, would pay significantly higher dividends by relying on at least half the fund's investment earnings.

Stedman, in an interview, argued that as lawmakers reduce the size of dividends, "the higher the chance of people going to the ballot box in 2018." A 50-50 split, like Stedman himself is proposing, would be more likely to survive than one that earmarks 25 percent for dividends, he said.

Even if citizens rejected a Permanent Fund bill, lawmakers could still pay for the budget with annual withdrawals of cash from the fund's earnings account, which is available for spending by a simple majority vote by the Legislature.


But the absence of a structure to guide those withdrawals could make for contentious debates each year about the right amount to take out.

A successful repeal campaign, Wielechowski said, would create "chaos."

"I'm shocked that more people aren't thinking about it," he said.

Nathaniel Herz

Anchorage-based independent journalist Nathaniel Herz has been a reporter in Alaska for nearly a decade, with stints at the Anchorage Daily News and Alaska Public Media. Read his newsletter, Northern Journal, at natherz.substack.com