New legislation aims to enshrine PFDs in constitution

Alaska Permanent Fund Corporation sign at headquarters in March 2016. House majority members want to enshrine Permanent Fund dividends in the state constitution. (Photo by Skip Gray/360 North)

Members of the House majority have introduced legislation to enshrine Permanent Fund dividends into the Alaska Constitution. Dividends would be at least $1,250 each year.

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The Alaska Permanent Fund became a part of the constitution in 1976. Permanent Fund dividends were started through state law five years later and were never made a part of the constitution.

That could change under House Joint Resolution 23, which Anchorage Democratic Rep. Chris Tuck introduced on Friday. The bill would allow the state to draw up to 5 percent of the Permanent Fund’s value from its earnings every year. A third of that would go toward dividends, with the other two-thirds going to fund state government.

“It does put a cap on how much government can spend, because you’re not going to be able to dip into the earnings reserve anything more than what the resolution guarantees,” Tuck said.

Fellow Anchorage Democrat Les Gara said differences between the House and Senate majorities have led him to believe that making PFDs part of the constitution is the right move.

In particular, he’s concerned that compared with a House bill, Senate legislation would allow oil and gas companies to lower the taxes they’ll have to pay in the future by more than $1 billion more by 2027.

“We’re worried that if they keep giving away that kind of money to oil companies, they’re going to keep pressuring the dividend down,” Gara said.

Senators have said the lower tax liability encourages oil and gas companies to invest in the state and will lead to more production.

Gov. Bill Walker proposed a bill to draw money from Permanent Fund earnings to pay for state government that would lead to $1,000 dividends. The Senate passed the bill, adding a limit on the amount of state spending.

The House version of the bill stripped out the spending limit and raised the dividend amount. It also required the Legislature to pass an income tax and increase oil and gas taxes for the Permanent Fund bill to go into effect.

Tuck said he hopes passing the amendment will help the chambers reach an agreement on the Permanent Fund bill.

Former lawmaker Clem Tillion leads a separate effort related to the PFDs. It aims to hold a referendum to repeal any change the Legislature makes this year to the Permanent Fund. Tuck hopes the amendment will end the referendum attempt.

“Well, hopefully when they see that we’re acting to protect the Permanent Fund dividend at our level that we have right now, they will back off on that,” Tuck said.

If two-thirds of each body passes the amendment, voters would consider it in November 2018. A majority is required is adopt an amendment.

Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.

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