$3,892 PFD advances as part of House committee’s deficit-laden budget draft

JUNEAU, Alaska (KTUU) - House lawmakers on Thursday advanced a version of the budget that would — if passed — include an approximately $3,900 Permanent Fund Dividend for qualifying Alaskans as part of a massive budget deficit.

The proposed dividend follows the statutory formula created in the 1980s, though that formula was last used as part of a payout about a decade ago.

Lawmakers have determined the final PFD amount since 2016, and an Alaska Supreme Court case that was decided in 2017 solidified the Legislature’s ability to do so.

During an hours-long meeting Thursday, the House Finance Committee passed House Bills 53 and 55, both of which are focused on state spending.

Though lawmakers generally sought to cut spending, the PFD was a major point of contention, with committee members sparring over an amendment that would’ve brought the PFD down to $1,000 from the $3,892 proposed by Gov. Mike Dunleavy, R-Alaska, in his version of the budget.

“The PFD is very important in my district,” said Rep. Nellie Unangiq Jimmie, D-Toksook Bay, who voted against an amendment to lower PFD payments and added that a regular income in her district is about $20,000 under the state’s average. “In my district, it’s $21,000 yearly or less.

“I had the opportunity to go to a couple villages,” she continued, speaking about a recent trip to her home region, “and we got lost, and I asked for directions, and I walked into a family — a mother — who was heating her home with an oven range, because she couldn’t afford stove oil. So, this will lift, and this will keep, 40% of my constituents out of poverty.”

According to the U.S. Census Bureau, the per-capita income over the past 12 months for data recorded from 2019 to 2023 is approximately $44,928 for the state of Alaska. The per-capita income is “the mean income computed for every man, woman, and child,” according to the Census Bureau.

Rep. Calvin Schrage, NA-Anchorage, who is co-chair of the committee and voted in favor of lowering the PFD payout this year, emphasized the importance of balancing the budget and said that while the committee has “done a pretty good job of holding things down ... the math is the math.”

“Even with us holding things down, even with us making some reductions, we have to make this balanced with the revenues that we have,” Schrage said. “We also have a law in the Constitution that says we need to be able to able to pass a budget that is actually funded. And the reality is, is we cannot do all of these things and still have the budget balance.

“We have to reconcile with the fact that there’s only so much revenue, and we’re going to have to take monies from somewhere else,” he said, adding that there is not enough money to support a full statutory dividend.

“If we’re not willing to do that here as a committee — which may be the case — someone else is going to have to do it. But I don’t want to abdicate that responsibility to someone else. I want to take ownership over our budget.”

Schrage also expressed concern over drawing “huge amounts” from the Constitutional Budget Reserve, the state’s main savings account, or trying to “raid” the Permanent Fund, which he said could end the dividend program altogether.

“The final option that I’m aware of is, we could institute taxes,” he said. “I haven’t heard a will to do any of those things from this committee.”

Multiple lawmakers made clear during the hearing that they were concerned about how the Legislature as a whole is addressing the PFD and the budget in general, especially while trying to bridge such a large gap.

“I think the appetite to spend in this building is insatiable — it’s just, spend, spend, spend; that’s we do,” Rep. DeLena Johnson, R-Palmer, said. “There’s lots and lots and lots of good things that we want to do to take care of people, but one thing I do know, is that the Permanent Fund allows people to have self-determination.

“[The PFD] allows people to have some input in what they actually believe is the best thing to make their life better, more palatable, and maybe even just keep them alive and out of poverty,” she added, expressing alarm that members of the committee feel a need to shrink the payments, and adding that she’s “disturbed” over the idea “that there’s something embarrassing about standing up for a larger PFD.”

“That there’s something wrong about standing up for people,” she said, “and saying, ‘It’s okay for people to want to have that money in their pocket,’ like there’s something greedy or improper about it. Well, it’s not.”

Some members, such as Rep. Alyse Galvin, NA-Anchorage, were conflicted over the amendment vote.

“We have been handed a $1.6 billion deficit,” Galvin said. “We need to do something that’s not so regressive. Instead, what we’re doing, is pulling from the PFD, and there’s mixed feelings about it, of course.

“Whatever it is, we need to put things on the table, in my humble opinion,” Galvin said, “because, when we’re handed a budget that’s $1.6 billion in the hole, you can’t cut that out, no matter how conservative you are.”

According to Rep. Andy Josephson, D-Anchorage, who brought forth the amendment to lower the PFD, the average PFD payment over nearly 35 years was $1,150. Former Gov. Bill Walker introduced legislation to begin using the Permanent Fund “as an endowment to operate state government,” he said, with that bill passing in 2018 in the form of SB 26.

“Every dollar spent on the dividend is one less dollar available for general fund needs, and vice versa,” he said. “This is particularly true in an environment where the state won’t raise revenue.”

Johnson said it isn’t only that “the funds don’t exist” to pay for what would be a historic-high PFD later this year, or that the proposed payout “would consume nearly 66 percent, or nearly two-thirds, of the entire annual draw.” In his eyes, “the issue is that the historic formula isn’t really supposed to exist quite this way anymore.”

When the Legislature was considering SB 26 that session, Johnson explained, both bodies passed bills with new formulas tied to percent-of-market-value. In the Senate, it was a 25% dividend, equivalent to $1,440 this year; in the House, it was 33%.

The final version of the bill, though, didn’t have a new finalized formula.

“That meant that the historic formula, no matter how unaffordable, has remained on the books, and since then, we’ve had this debate every year,” Johnson said.

The amendment — No. 95 as part of House Bill 53 — was not adopted after a 7-4 vote. Reps. Jimmie and Johnson; Will Stapp, R-Fairbanks; Jamie Allard, R-Eagle River; Jeremy Bynum, R-Ketchikan; Frank Tomaszewski, R-Fairbanks; and Neal Foster, D-Nome, voted the amendment down, while Schrage, Galvin, Josephson, and Rep. Sara Hannan, D-Juneau, voted in favor of adopting it.

Regarding the aforementioned case from 2017, the Alaska Supreme Court determined that “the constitutional appropriations clause required that the Legislature appropriate the money” for qualifying Alaskans’ PFD payments. That particular case surrounded a veto from the year prior by then-Gov. Walker — of whose case the court ruled in support — determined that the governor could also veto the Permanent Fund Dividend appropriation.

In a release following the court’s upholding of the governor’s veto at that time, the Department of Law pointed to Article 9, section 7 of the Alaska Constitution, which is known as the anti-dedicated funds clause.

“The clause reads: ‘The proceeds of any state tax or license shall not be dedicated to any special purpose…’ with certain exceptions,‘” the DOL wrote. “The Court’s opinion today clarifies that none of the exceptions apply to the earnings of the Permanent Fund.

“Any money to be spent from the permanent fund earnings reserve account must go through the normal budgeting process,” the department continued, “whereby the [L]egislature annually appropriates specific sums of money for certain purposes, and the governor can then strike or reduce those sums under the veto power in article 2, section 15 of the Constitution.”

The bill, as amended, advanced to the Rules Committee in a 6-5 vote. As of publication, it had not yet been decided when the House will next take up the legislation.

House Bill 55 was also moved out of committee Thursday.

See a spelling or grammatical error? Report it to web@ktuu.com

Copyright 2025 KTUU. All rights reserved.