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Alaska Legislature

In testimony, Alaskans urge lawmakers to preserve the Permanent Fund dividend formula

JUNEAU — Alaskans turned out in droves Thursday to reject a possible solution to the state’s structural deficit that would require changes to the traditional formula that pays the Permanent Fund dividend.

In almost three hours of frustrated, determined and sometimes angry testimony, state residents spoke against a proposal from North Pole Republican Rep. Tammie Wilson and other members of the coalition House majority to pay a traditional $3,000 dividend this year but halve the amount in subsequent years.

Changing the traditional distribution formula would eliminate the state’s deficit but alter a system that has been in place, mostly unchanged, since 1982.

The Alaska Supreme Court ruled in 2017 that the dividend is not an automatic transfer and is subject to annual appropriation by the Legislature. That has allowed lawmakers to reduce the amount, even though the traditional formula remains in state law.

Ed Martin Jr., of Cooper Landing, called the proposed change “out and out bribery” because it offers the first statutory dividend since 2015 in return for a long-term change.

Martin and others, such as David Hern of Wasilla, said a statutory dividend is owed to Alaskans, and any reduction is theft.

“You broke the law stealing our PFD the last three years. Give us our money back. We’re sick of your lies. It’s our money, not yours,” Hern said.

Rep. Gary Knopp, R-Kenai, is seen beneath a chart depicting the projected value of the Alaska Permanent Fund Dividend under House Bill 1005 during a House Finance Committee meeting on Thursday, May 23, 2019. (James Brooks / ADN)

According to a statistic from the legislative teleconferencing system and notes taken in the meeting, 117 people signed up to testify. Of those, 76 offered their comments (some had to hang up because of long wait times).

Of the 117 people who signed up, 38 people called in from the Matanuska-Susitna Borough or Eagle River; 19 were from the Kenai Peninsula; 24 were from Anchorage, and 13 were from the Fairbanks area (including Salcha and North Pole).

Lawmakers took additional testimony after 5 p.m., and a count was not immediately available.

Many of those who testified Thursday spoke in support of a competing proposal by Rep. David Eastman, R-Wasilla, who is proposing to pay the statutory dividend unconditionally.

Eastman had tough words for the members of the coalition House majority who are supporting the new legislation.

In a Wednesday message, he said they are “declaring war on the dividend as we know it."

After Thursday’s public testimony, he said “all the strings they’re attaching” to the statutory dividend are an insult to the people of Alaska.

“That’s the message I got,” he said after Thursday’s testimony.

Rep. Sarah Vance, R-Homer, is among a handful of lawmakers who have already signed up as cosponsors to Eastman’s legislation, which is similar to a proposal from Gov. Mike Dunleavy.

“I’m not surprised,” she said of Thursday’s testimony. “This is what I’ve continued to hear from the people for many, many years. This is why I stand by preserving the historical formula because this is what Alaskans want.”

Matt Shuckerow, the governor’s press secretary, reconfirmed Thursday that the governor is opposed to changing the traditional formula unless voters approve the change in a statewide referendum.

In addition, the state-funded “Restore the PFD” social media accounts operated by the governor’s office have characterized the legislation as a “bait-and-switch bill" and are campaigning against it, buying advertisements that urge voters to call lawmakers and voice opposition.

The Permanent Fund Defenders, the best-known citizen group associated with the Permanent Fund, offered their support for Eastman’s proposal.

“Just obey the law. Give the people a full dividend,” said group president and former state Sen. Clem Tillion.

The drawback of a statutory dividend is that it creates a $1.2 billion deficit under the draft budget proposed by lawmakers this year. The governor proposed shifting some costs to local governments and extensive cuts to state services in order to balance the budget with a traditional dividend, but lawmakers were unable or unwilling to accept all of the governor’s choices.

That means lawmakers must either spend from savings or cut the dividend in order to present a balanced budget to the governor, as the state constitution requires.

Excepting the dividend, the state budget has already been cut substantially. The budget under consideration by lawmakers would be the lowest in 12 years. According to figures from the nonpartisan Legislative Finance Division, if adjusted for inflation and population, agency spending would be on par with what the state spent in the years immediately before completion of the trans-Alaska Pipeline System.

The Legislative Finance Division figures indicate that spending, adjusted for inflation and population, was lower in the late 1990s and early 2000s than it is today.

Vance said she heard Thursday and has heard before that her constituents feel there is room for more cuts in the state budget, and because of that, they don’t believe the dividend formula needs to change.

“They don’t want to be forced to pay for state government that they feel is still being wasteful,” Vance said.

Earlier in the session, members of the House Finance Committee held a series of town hall meetings across the state and heard from hundreds of Alaskans opposed to budget cuts.

Now, they’re hearing from Alaskans who want cuts in order to receive a statutory dividend.

Debra Kuse of Wasilla said voters will bear the responsibility if services are cut in order to pay that dividend, and she feels they’re willing to accept the consequences of that decision.

She illustrated her feeling with a quote from Abraham Lincoln.

“If they decide to turn their backs and burn their behind, then they will just have to sit on the blisters,” she said, quoting Lincoln. “If we burn our behinds, then we’ll put ointment on it.”

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