It’s PFD announcement day in Alaska — but it’s a little less exciting than usual. That’s because this year, for the first time in the program’s history, it’s been cut.
Governor Bill Walker announced in a pre-recorded video on Friday exactly how much Alaskans would receive in this year’s Permanent Fund Dividend check: $1,022.
This year’s dividend checks could have been about twice as much, but Walker vetoed half the money appropriated to dividends earlier this year while the state battles a $4 billion deficit.
On Thursday, Alaska’s Energy Desk asked Alaskans how they felt about this year’s smaller dividends. Some people already knew to expect a change.
MCCHESNEY: Do you know how much the PFD is this year?
MAN: What is should be, tomorrow, should be about $1500.
WOMAN: My guess is maybe about, $1200.
MAN: I know it’s not what it should be.
Back in July, Governor Bill Walker’s veto capped the dividend at about $1,000. Without the veto, there would have been about $1.4 billion available for dividends.
“That number would equal a little bit over $2,000 per Alaskan,” said Ken Alper, director of the Alaska Department of Revenue’s Tax Division.
Alper and Walker argue that with the current budget crunch, the state couldn’t afford that amount.
As oil prices have crashed over the last two years, the state has covered billions in budget deficits by drawing from its savings accounts. If lawmakers continue on their current path, they’ll burn through the state’s primary savings account in about two years. Then they’ll have to use the account the dividends come out of.Right now that account has about $7 billion in it. At current spending levels it will be drained in a few years as well. Then there wouldn’t be money for the budget ordividends.
“That could go away in another couple of years and when the governor talks about, in 2020, the dividend would go away unless there’s a fiscal plan, that’s just not an idle threat, it’s a mathematical fact,” said Alper.
Alper and Walker want lawmakers to restructure the permanent fund and pass a combination of taxes and spending cuts to balance the budget. And in the meantime, they say we shouldn’t spend the nearly $700 million it would have taken to give everyone in the state $2,000 checks this year.
For now, that money is just staying in the account.
“It’s not going anywhere, it remains in the earnings reserve, it continues to be invested and it’s going to be producing income for future generations,” said Alper.
A lot of people aren’t happy with the idea that Walker is messing with the Permanent Fund. One lawmaker sued. For a lot of Alaskans, that fund is inviolate.
That includes Anchorage resident Daryl Shaw, who was born in Alaska. His daughter was born just in time for the first dividend check in 1982. He says when the fund was started, it was supposed to be untouchable.
“I’m not the sharpest tool in the shed and I’m not a politician, but I’m an Alaskan and I just don’t think it’s right for Gov. Walker to actually reach into that fund and be able to even touch it in any way shape or form,” said Shaw.
But the amount of this year’s dividend isn’t uncommon. In fact, if you take an average over the last 33 years, it’s just under $1,100.
We talked to Alaskans in Anchorage, Juneau and Unalaska, and a surprising number said that $1,000 is good enough for them.
MAN: That’s fine, you know. It’s better than taxing me.
WOMAN: If you’re on a fixed income, it makes a difference. Yeah you count on it, you do. But I guess I’m thinking that $1,000 is a pretty fair cap.
MAN: I always joke that people call it the permanent dividend funds thinking that the dividends are what’s permanent. The dividends are not permanent, they’re very temporary. They’re a way of getting the public to support the necessity of saving money for the future.
It’s likely that one way or another, the future means smaller dividends.