I support protecting the Permanent Fund Dividend program. The PFD provides economic stability 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 was the House’s “last resort” in 2018. The House 4 pillar comprehensive plan would have increased revenues from both oil companies and a broad-based tax, but the Senate refused to increase any revenue. We were able to increase the dividend by $500 from the 2017 $1100 PFD.
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:
- Percent Of Market Value (POMV), discussed under “Taxes”
- 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.