P.O. Box 1564
Homer, AK 99603-1564
Telephone: (907) 299-3434
Paul Seaton

    for Alaska State House of Representatives
    District 31

Permanent Fund Dividend

I support protecting the Permanent Fund Dividend program. The Permanent Fund Dividend provides economic stabilization to a great many Alaskan families and great economic stimulus to all sectors of our retail economy. Raising revenue by reduction of the PFD means that only resident Alaskans are 'taxed'. Directly reducing the PFD would be the "last resort" I would consider to balance the state budget. The damage to our economy and citizens would be greater than any other combination of revenue measures.

The PFD was created by legislation and is defined in statute, not in the Constitution. Under the current formula, the Dividend payout is appropriated by the legislature each year as no more than 50% of the amount in the earnings reserve on June 30. If there is a net loss of earnings in the reserve account - a zero or negative balance - no dividend could be paid. This situation occurred twice during 2003 because of the drastic fall in the stock market, but had reversed by June 30. This could have severely restricted the amount for 2008 as well. Something needs to be done to assure the zero balance will not occur in the future if we are to fully protect the annual PFD. The only two suggestions are

  1. Percent Of Market Value (POMV), discussed under "Taxes"
  2. Earnings should be retained in the earnings reserve, rather than the legislature periodically re-depositing accumulated earnings into the principal of the Permanent Fund. The legislature has grown the permanent fund principle by transferring over 7 billion dollars of earnings into the fund principle. However, this money was then not available in the earnings to serve as a cushion for dividend payments in the case of investment downturns.