PFD constitutional amendment advances to House floor vote

JUNEAU — A proposed amendment to the Alaska Constitution that would guarantee an annual Permanent Fund dividend has advanced to a vote on the House floor.

House Joint Resolution 7 would pay out whatever dividend was set in state law. The 1982 dividend formula would currently be used. If followed this year, eligible Alaskans would receive a roughly $3,400 dividend, but the budget would be close to $1 billion in deficit.

Rep. Ben Carpenter, a Nikiski Republican, said the intent behind the constitutional amendment was to force legislators to discuss the formula used to calculate the dividend, and the state’s long-term finances.

“We have a structural deficit with regard to low oil prices and low return on investment earnings — that puts our state in a precarious position,” he said.

Other components of a comprehensive fiscal plan could include new revenue measures and a tighter legislative spending cap, among other proposals, he said, adding that with lawmakers focused on education and Cook Inlet gas shortages, fiscal plan measures are unlikely to pass this year.

Two-thirds of the House and Senate would need to approve the constitutional amendment to put it before voters at the November election. Several lawmakers said the numbers could be close in the House to meet the 27-vote threshold.

After the price of oil crashed and state savings had been all but depleted, legislators have approved the dividend each year since 2017 as part of the budget-making process. Lawmakers approved a measure in 2018 that started annual draws from the Permanent Fund for state services and the PFD.

Homer Republican Rep. Sarah Vance has long supported using the historical dividend formula. On Tuesday, Vance said she supported the constitutional amendment as “a step in the right direction” to resolve the long-running dividend debates.

“The people are tired of the Legislature not solving the problem,” she said.

[Permanent Fund board again warns that the fund is running out of spendable money]

Anchorage Rep. Cliff Groh, a Democratic House minority member, said that he supports the constitutional amendment but that new revenue measures, like a state income tax and an oil tax hike, would also be required.

On Tuesday, Groh said the 1982 dividend formula was “unsustainable” and would need to be amended. The Dunleavy administration’s Office of Management and Budget on Monday projected that state savings accounts would be exhausted within three years if the historical formula were followed.

Last legislative session, Carpenter worked on crafting a fiscal plan package with a new dividend formula, a 2% state sales tax coupled with a corporate tax reduction, and a new spending cap. The proposal collapsed due to rifts in the Republican-led House majority.

After the PFD constitutional amendment was scheduled for a vote on the House floor, some legislators and former state lawmakers raised concerns about the potential implications of the measure.

Rep. Andy Josephson, D-Anchorage, on Tuesday said he would do whatever he could to ensure the measure did not pass because it was “an appallingly bad idea.”

If the constitutional amendment is approved, full dividend supporters would not surrender easily during future PFD formula debates, he said.

“I fought passionately against exorbitant dividends,” Josephson said. “And this is worse than that. This is a permanent exorbitant dividend.”

It’s unclear when the constitutional amendment would be scheduled for a vote in the House before it advanced to the Senate. The measure appeared on Monday and Tuesday’s House floor calendar, but a contentious Republican-backed education package overtook other legislative work.

Carpenter said that with “passions inflamed” over school funding, there may need to be “a tactical pause” before the amendment is heard on the House floor. Negotiations over the education package on Tuesday continued between lawmakers behind closed doors.

The last amendment to the Alaska Constitution approved by voters was in 2004, which changed signature-gathering requirements for ballot measures.