PFD Surrender: The Alaska State House Just Voted 39-1 to Slash the PFD by More than $1,000

To his credit, Governor Dunleavy held to a full PFD in his proposed state budget again this year, and took all the slings and arrows that went with his doing so.

Given the level of open hostility that the legislature has toward the dividend today, my hat is off to the governor for his doing so two years in a row.

Two years in a row, the governor has put a full dividend in the budget.

Two years in a row, the very first thing the House did was to reject the governor’s budget, 39 to 1, and replace it with a budget proposed by the Democrat-controlled House Finance Committee.

The House vote this morning increased the overall budget without the dividend by $245 million.

Against the backdrop of those increases, it cut the dividend by at least 30%.

I say “at least”, because today’s vote cut the dividend from an estimated $3,460 per Alaskan to no more than $2,430 per Alaskan.

The $2,430 in the budget currently is calculated in such a way that it will drop lower if the price of oil doesn’t hit certain targets.

The $3,460 amount is what the dividend would be according to state law if the legislature had not intervened today to make it a lesser amount. By necessity, it remains an estimate until the amount calculated under state law is finalized in September.

This was just the opening salvo in the fight for this year’s dividend. Tomorrow morning at 10am the House will debate additional changes to this year’s operating budget. It is an election year, so there will be half-hearted attempts to bring the budget back up to a full dividend, but the vote that mattered was the vote that was held today. This vote sets the high-water mark for the dividend.

Once the legislature starts cutting the dividend, it never returns to the full amount under state law. The senate normally takes whatever is left of the dividend after it passes the House and makes that the starting point for further negotiations that will result in an even smaller dividend. In short, the vote this morning mattered a great deal to those of us committed to following the law because it effectively guarantees that the law will not be followed again this year—for the 9th year in a row.

For the second year in a row, the legislature has tied the amount of a PFD check to the price of oil. The price of oil is something over which Alaskans have no control. It also has absolutely no bearing on the calculation of the dividend under state law. It reflects a “dividend last” approach, which says that the dividend will be whatever is left over after the lobbyists and the special interests have had their turn at the trough in Juneau. That’s not a dividend.

This morning’s vote was also no accident.

My house colleagues took some heat last year for voting to cut the dividend 39 to 1 at this same point in the budget process last April.

Some may ask why I continue to vote 39 to 1 for a full dividend every year. To be sure, it puts me at the very bottom of the pecking order in Juneau. Even so, for me, the decision is straight forward.

My children receive a dividend each year. My eight-year-old keeps track of what happens with her dividend. Since she was little, she refers to it as her “Horsey Money”. She wants to buy a horse when she gets older. Since she was five, she’s been able to articulate that those in the legislature (most of whom she knows by name) don’t know how she wants to spend her Horsey Money.

More than the dollar amount of the dividend, there is something else at stake in this battle. Alaskans decided decades ago to lock down the amount of the dividend in state law according to a specific calculation. When the permanent fund does well, it goes a little higher. When the permanent fund does not so well, it goes a little lower. In both cases, the calculation of the dividend is based on a 5-year average to curb volatility.

That calculation hasn’t changed since 1986.

Every legislature has the ability to change the law that determines the calculation, every legislature including the current one.

Since 2016, instead of changing the law, every legislature has instead set aside state law and approved a different PFD amount than the one established in state law.

As legislators, we have the option of changing that law whenever we want. And yet, for the ninth year in a row, legislators are determined to set aside the law without changing the law. Have you thought about why that is?

If legislators changed the law, the right of the people to hold a referendum and overturn that change kicks in.

If legislators change the law, the governor might veto the changes.

If legislators change the law, a whole lot of them might lose their re-election campaigns on Election Day.

That is how our constitutional system works. The legislators have a say. The governor has a say. The people have a say.

The functioning of that entire constitutional system depends on legislators honoring and respecting the law enough to follow it, or try to change it. Our current group of house legislators is not willing to do either.

Accordingly, they have lost the support of my family and I. If they are to be re-elected it will have to be with the support of others.