The leader of the Alaska House of Representatives has introduced a proposal to constitutionally guarantee Alaska’s Permanent Fund Dividend.
The proposal by Rep. Chris Tuck, D-Anchorage, creates a constitutional amendment guaranteeing a dividend of at least $1,250 per person.
According to the text of House Joint Resolution 23, “The legislature shall provide for a dividend payment to State residents of not less than $1,250 for each resident each year.”
While the Alaska Permanent Fund — which pays dividends annually — is constitutionally protected, the dividend program is not. Nevertheless, the Alaska Legislature has refrained from altering it for the past 35 years because of its immense popularity.
With Alaska facing a $2.7 billion annual deficit amid dwindling savings accounts, that is about to change.
The House and Senate have each proposed spending some of the earnings of the Permanent Fund to erase portions of that deficit. The Senate has proposed reducing dividends to $1,000; the House has proposed reducing them to $1,250.
Without action by the House or Senate, the dividend is expected to be $2,200.
There’s almost no chance that Alaskans will see that much money. Last year, when the House and Senate failed to reach a deficit-fighting deal, Gov. Bill Walker vetoed all but $1,000 of the dividend. The governor appears likely to do the same thing if the Legislature again fails to close the deficit.
“We now feel there is a need to constitutionally protect the dividend going forward,” said Speaker of the House Bryce Edgmon, D-Dillingham, on Friday morning.
HJR 23 has a long way to go. Constitutional amendments proposed by the Legislature must be approved by a two-thirds vote of the House and a two-thirds vote of the Senate. Only then do they go to voters.
Just by its introduction, HJR 23 will affect the political process in Juneau. Speaking Friday morning, Tuck said the measure will put pressure on the Senate to approve a higher dividend.
As a side effect, SJR 23 — assuming it reaches the statewide ballot — would counter a push for a statewide referendum on fixing the deficit, he said.
“I’d rather have this on the ballot than some sort of referendum,” Tuck said of the dividend guarantee.
Rep. Les Gara, D-Anchorage, said members of the House Majority are concerned that if the Legislature cuts dividends but only erases a portion of the deficit, there will be momentum to cut the dividend still further in the future.
“We’re now concerned about the dividend,” Gara said, adding that he doesn’t want to see the state cut the dividend without cutting subsidies for oil and gas drilling.
Sen. Anna MacKinnon, R-Anchorage and co-chairwoman of the Senate Finance Committee, said she isn’t sure the proposed amendment will accomplish any of its goals. The House and Senate have enough substantive topics already on the table that adding one more may not accomplish much.
“We have so many shiny objects in the water right now,” she said.
She added that she sees a critical flaw in the amendment proposal: a clause that requires dividends to be paid at the $1,250 level even if the Permanent Fund doesn’t have enough money.
If oil prices were to slump simultaneous with markets, that could leave the state in an uncomfortable position, MacKinnon said. Alaskans might be required to choose between dividends and education funding.
“I think all of it is well-intended … I just think they’ve gotten awfully granular and there could be huge problems for Alaska in the future,” she said.
HJR 23 has been referred to the House Finance Committee, which has scheduled it for Thursday.
• Contact reporter James Brooks at james.k.brooks@juneauempire.com or call 419-7732.
