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Are the days of big Alaska PFDs numbered?

  • Author: Nathaniel Herz
  • Updated: September 28, 2016
  • Published September 21, 2015

Alaska Gov. Bill Walker delivered a stern message Monday to state residents, who learned from 12-year-old Shania Sommers that this year's Permanent Fund dividend checks would be a record-high $2,072.

"Some may see this amount that Shania will announce and go, 'Oh, everything is fine,'" Walker said at a news conference Monday morning. "Well, it's not."

With thousands of Alaskans watching, Walker used his platform Monday not to tout residents' good fortune, but instead to warn them that the years of big dividends may be numbered.

Walker and some members of the Alaska Legislature are eyeing the $51 billion Alaska Permanent Fund, and the $1.3 billion in dividends that will be issued this year, as money that could help close Alaska's $3.5 billion budget deficit.

In a message posted to his Facebook page following the PFD announcement, Walker noted that the state's spending on dividends this year will exceed spending on education.

"Alaskans need to know this is unsustainable," the post said.

Walker's message Monday was welcomed by several members of the Legislature -- the branch of government that would approve plans to change the way the Permanent Fund's earnings are paid out.

"I bet I could have written that speech for him," said Rep. Mike Hawker, R-Anchorage.

The Permanent Fund, Hawker added, "was not created to be the permanent dividend fund."

"It was, in fact, created to be savings account that specifically would be for supporting public services in the day that our oil revenue couldn't support it," he added, referencing the fact that the state's budget shortfall stems from a crash in the price of oil and a long-term drop in production.

Alaska's Constitution bars lawmakers from spending the fund's principal. But its earnings are available by a simple majority vote.

Lawmakers have debated using fund earnings to pay for government before, but the idea faces widespread public skepticism. A 1999 ballot question saw 83 percent of voters reject the idea.

A recent poll by the Rasmuson Foundation, which wants lawmakers to consider capping dividends and using fund earnings to pay for government, found voters generally preferred using Permanent Fund money to pay for services before the creation of statewide sales or income taxes.

But at least one conservative lawmaker said Monday he remained firmly opposed to the idea.

"The thought outrages me. That's the word -- it angers me at a core level," Rep. Wes Keller, R-Wasilla, said in a phone interview. "If that money gets spent on snowmachines or drinking or whatever, that's the right of the people. It's a property ownership issue -- the dividend, we don't want to mess with it."

Keller said lawmakers should balance Alaska's budget with cuts, rather than by raising new revenues. Asked about fiscal experts' views that firing all state employees would still leave a multibillion dollar deficit, Keller responded that he meant the Legislature has to do a "total rethinking of how we're getting business done."

He said he'd been getting a haircut Monday morning in Wasilla, where a pair of hairdressers were discussing how one would use her dividend to pay off her car loan and another would use hers for student loans. When Keller tried to steer the conversation toward the state's fiscal crisis, "they were not interested in that."

"They were busy paying bills, and that's as far as they could see," he said.

Other lawmakers, like Hawker, were more receptive to Walker's message.

Anchorage Sen. Berta Gardner, the leader of her chamber's Democratic minority, said she's open to discussions about spending fund earnings on government -- even if she wasn't ready to expressly endorse the idea.

"The important thing is for Alaskans to get involved and engaged and participate," she said in a phone interview.

Residents, Gardner added, have to think about the "highest and best use" of the money that goes toward their dividends.

"It is a big income generator for small businesses all over this state. It's an opportunity for people to get their broken tooth fixed, to get snow tires -- and for other people, it's a trip to Hawaii or it goes into an account," she said. "So, we have to balance that."

A trio of Republican senators, meanwhile, issued a joint statement following Walker's news conference that praised him for emphasizing Alaska's fiscal problems. The statement didn't say how the senators propose to close the state's deficit, but it quoted Sen. Pete Kelly, R-Fairbanks, suggesting that $2,000 payments like this year's may be short-lived.

"Winter is coming, so I would encourage Alaskans to use their dividends well," Kelly said, recycling a popular quote from the "Game of Thrones" book and HBO television series.

Walker and members of his administration have been crisscrossing the state over the last few months to deliver their message about the need for Alaska to restructure its finances, and other elected officials have also gotten involved in the campaign.

Kenai Peninsula Borough Mayor Mike Navarre, a former Democratic state legislator, published an opinion piece in multiple newspapers Sunday, including the Alaska Dispatch News, urging Alaskans to consider spending some Permanent Fund earnings on government.

"Doing nothing is an irresponsible option," he wrote.

Navarre said in a phone interview Monday the responses he'd heard had been positive. And he said he was optimistic lawmakers would take up the issue when the next legislative session begins in January.

"I actually think that the Legislature recognizes the magnitude of the problem, even if the public doesn't entirely," he said.

Hawker said he expects lawmakers to make some type of change to the state's dividend program before next year's amount is announced.

"But what the nature of that change might be -- that's certainly going to be the subject of much dialogue between now and then, before any changes are solidified in law," he said.

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