Alaska working group seeks way forward on permanent fund dividend amid heated debate

The bicameral working group on permanent fund earnings meets for the first time on June 12. The members from left to right are Rep. Kelly Merrick, R-Eagle River; Rep. Jonathan Kreiss-Tomkins, D-Sitka; Rep. Adam Wool, D-Fairbanks; Rep. Jennifer Johnston, R-Anchorage, co-chair; Sen. Click Bishop, R-Fairbanks, co-chair; Sen. Bert Stedman, R-Sitka; Sen. Shelley Hughes, R-Palmer; and Sen. Donny Olson, D-Golovin. (Andrew Kitchenman/KTOO and Alaska Public Media)
The size of this year’s permanent fund dividend looms over every other issue facing the Alaska state government.

Gov. Mike Dunleavy made PFDs the only subject of the special legislative session beginning July 8 in Wasilla. Some legislators are hopeful that a new, eight-person working group will lay the groundwork for resolving the issue — at least for this year.

Legislators have been arguing over how much Alaskans should receive in their annual dividend since the price of oil dropped more than four years ago.

Group co-chair Rep. Jennifer Johnston says when it comes to PFDs, many lawmakers have entrenched positions. But the Anchorage Republican is hopeful the working group can offer a fresh perspective.

“It’s been an emotional debate,” she said. “And sometimes emotional debates are good, but sometimes they end up with parties maybe yelling at each other and nobody listening. So if we can set an environment where we are not just talking to each other, but we are actively listening, I think that we have a chance at coming up with some policies.”

Finding a better formula

For the last three years, the government hasn’t followed the dividend formula set in a 1982 state law. Former Gov. Bill Walker and lawmakers have said they wanted to maintain state services and keep money in the permanent fund’s earnings reserve.

Working group members say they want the committee’s work to help end the annual fights over dividends.

Fairbanks Democratic Rep. Adam Wool said it’s time to bring the dividend formula in line with a PFD amount that will have political support and pay for government.

“We’ve broken that law several times over the last few years and … I think it’s time we resolve that impasse and not only come up with a number or a formula we can afford, but (also) one that we can follow,” Wool said.

A challenge for the state is a separate law enacted last year that limits the total amount drawn from permanent fund earnings to roughly 5% of the fund’s overall value.

That law pressured the Legislature to cut dividends by more than $1,300 last year. Dunleavy then won after running on a platform of restoring full PFDs.

Palmer Republican Sen. Shelley Hughes is a working group member who also has supported full dividends, which would be roughly $3,000 this year. She said any change the Legislature makes must be supported by the public.

“I believe that a sleeping giant has been awakened actually, primarily because we’ve had such difficulty solving this,” she said. “And I just want the people of Alaska to know I don’t take this task lightly. And I also believe it is of vital importance that the people of Alaska listen to … what will be presented at this table and to the conversation. And that they come along on this journey with us, and work with us.”

Ensuring fund’s growth

Other working group members have emphasized the future growth of the permanent fund. Sitka Republican Sen. Bert Stedman is among them.

“My personal concern is that we look to the future of Alaska, like the participants at this table did 40 years ago when they set up the permanent fund, and we preserve the integrity and the viability of the future funds for Alaskans that aren’t even born yet,”he said.

Stedman said he doesn’t want the working group to reach a conclusion and then fudge the analysis to make it fit the result. He’s concerned that the 5% permanent fund draw passed last year will prevent the fund from growing in the future.

“It’s too high,” he said. “And that’s a policy call. If the current generation wants to take all of the future growth to itself, that’s a call, we can do that. Some of us would like to leave more for our descendents.”

The other working group members are Fairbanks Republican Sen. Click Bishop, the co-chair; Golovin Democratic Sen. Donny Olson; Sitka Democratic Rep. Jonathan Kreiss-Tomkins; and Eagle River Republican Rep. Kelly Merrick.

The committee  aims to make recommendations on how permanent fund earnings should be used — including what should happen with dividends — by July 2.

The working group will meet again on Wednesday. They plan to discuss the history of both the permanent fund and dividends.

Related stories from around the North:

Canada: Canada’s territorial premiers discuss priorities for a ‘united North’, CBC News

Finland: Finland’s new gov breezes through no-confidence vote over its agenda, Yle News

Sweden: Swedish government unveils proposed spring budget, Radio Sweden

United States: Alaska borough to split from Municipal League over its opposition to governor’s budget, Alaska Public Media

Andrew Kitchenman, Alaska Public Media & KTOO - Juneau

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