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In planning for a larger Permanent Fund dividend, Anchorage appears to stand alone

  • Author: James Brooks
  • Updated: December 9, 2018
  • Published December 9, 2018

Anchorage city hall (ADN)

On the Tuesday before Thanksgiving, confronted by a crowd of disgruntled residents wielding flowers, the Anchorage Assembly adjusted its budget.

In an effort to save the municipality’s $1.7 million line item for horticulture, the Assembly approved a revised revenue forecast. Part of that forecast includes a bet on the future. The bet is that Gov. Mike Dunleavy will propose — and the Alaska Legislature will agree to pay — a significantly larger Permanent Fund dividend in 2019.

It’s a bet that no other Alaska city appears to be making.

“We don’t want to speculate on something that’s not a sure thing,” said City of Fairbanks finance director Carmen Randle.

Of Alaska’s 162 incorporated cities and boroughs, it appears only Anchorage’s budget includes the expectation that the Permanent Fund dividend will be higher in 2019. The municipality is forecasting a $2,500 dividend, up from $1,600 in 2018.

Dunleavy pledged during his campaign to increase the dividend by restoring the distribution formula to traditional levels but such an action would have to be approved by the Alaska Legislature. Dunleavy’s pledge to repay billions in dividend payments reduced by the Legislature and Gov. Bill Walker would also have to receive legislative approval.

That uncertainty has city finance directors unwilling to translate campaign pledges into fiscal reality.

Most of the state’s cities base their budgets on a fiscal year that begins in the spring or summer. Anchorage and a relative handful of others use the calendar year as their guide. Ketchikan, Cordova, Valdez, Fairbanks, North Pole, Palmer and a series of smaller communities are listed in the state Division of Community and Regional Affairs database as using the calendar year.

None of those cities said they are counting on a larger dividend.

“No,” said Stephanie Mandregan, controller of the town of St. Paul, on St. Paul Island.

“I wouldn’t feel comfortable doing that,” said Tricia Fogarty, chief financial officer of North Pole.

“The City of Palmer prepared its 2019 calendar budget in September and the City did not adjust the 2019 budget in anticipation of a larger Permanent Fund Dividend in 2019,” wrote Gina Davis, the finance director in Palmer, by email.

“The city has not made any revisions based on the election,” wrote Valdez finance director Brian Carlson by email.

Anchorage budget director Lance Wilber said there is little risk if the municipality’s prediction doesn’t come to pass. Every April, following local elections, the new-look Assembly examines its projections and makes revisions based on what has actually happened to date.

“There are hundreds of moving parts, and this is just one,” he said by phone. “If for some reason the new information suggests that the PFD would be more or less that we had projected, we’re going to adjust it then.”

Anchorage’s budget appears to be affected less by fluctuations in the Permanent Fund dividend than other municipalities across the state. Communities that rely on sales taxes have seen their tax revenue climb in years with large dividends, then sink in years with low payouts.

Two years ago, when Walker vetoed half of an expected $2,000 dividend, the city of Juneau experienced a significant cut in sales tax revenue. Though Anchorage doesn’t have a sales tax, it can garnish the dividends of people who fail to pay fines levied by the Anchorage Police Department. In 2016, the dividend cut resulted in a $1.8 million hit to the department’s budget.

This time around, a larger dividend would yield the opposite result — assuming the Alaska Legislature goes along. The legislative session begins Jan. 15.

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