Brennan: Make your opinion known

By Tom Brennan |

Those holding strong opinions about the size of Alaska Permanent Fund dividends need to let people know.

Most importantly, they need to make their opinions known to Gov. Mike Dunleavy and the legislators representing their districts, both House and Senate. But share them as well with the  media and general public.

These are transitional times in Alaska. The budget is tight, agencies are clamoring for more money and the pressure is on once again to dip into the Permanent Fund Earnings Reserve Account to meet state needs.

Going into Earnings Reserve again this year is all but certain. The Legislature took money from there for the first time last year. Much of state spending is funded by oil and gas taxes and royalties and the difference between current income and budget needs is made up by drawing down savings.

In the past, state government income has been supplemented by drawing down the Constitutional Budget Reserve Account, which was built with billions from past settlements of tax and royalty disputes won by the state from the oil industry. But these days the CBR is almost gone, down to a couple of billion the last we heard. 

In 2018 the time finally arrived when the Earnings Reserve had to be tapped, both for state budget spending and for the dividend checks we all received. In 2018 the dividends were $1,600, which was less than the previously accepted formula would have offered. Because we got short-changed in the last few years, Dunleavy was talking earlier about making up for the short checks of the Bill Walker years with a whopping dividend of $3,157, almost double last year’s.

But reality has set in and the Legislature is now talking about a dividend of between $1,000 and $1,600, with the balance of available cash going for essential state spending. Going higher would mean either cutting the budget, which would impact state services and a variety of state-funded programs, or dipping deeper into the Earnings Reserve Account.

If you feel strongly about paying the largest possible dividend, that is what you need to convey to state leaders, both public opinion leaders and those elected to represent us. I don’t feel strongly either way. If the state writes us larger dividend checks, either state operations will be shorted or the dip into savings will be larger. I like getting the money but worry that if they go through the Earnings Reserve Account the way they did the Constitutional Budget Reserve the ERA might run dry too.

That isn’t likely to happen anytime soon since the CBR was funded with one-time settlements and the ERA gets contributions every year as earnings are spun off from the body of the Permanent Fund. In recent years those deposits have been on the order of $4 billion. 

So, if my math is correct, the state could tap the ERA each year for a combination of $4 billion in budget needs and dividend checks — and the ERA would not be diminished. Putting half of that into dividends would mean checks for you and me of $2,700, about $500 below what the governor proposed.

Right now it looks like the dividend checks will be more like what we got last year, or less, with the rest going for what is arguably essential state spending.

If you don’t like that, sound off. If it’s OK by you, just grin and bear it.

2 Responses to Brennan: Make your opinion known

  1. Terri April 14, 2019 at 7:25 am

    I believe that the budget should be cut and the permanent fund dispersed as mandated by law. Maintaining our current level of spending is no solution.

  2. Randy S. Griffin Fairbanks Alaska April 14, 2019 at 3:53 pm

    The PF dividend for me should be $100. The reason is so as to reduce the federal income taxes that I have to pay, for receiving the PFD.

    For the past 4 years, I have not cashed my PFD checks. I endorse them and send them back to the state with a note instructing them to deposit it into the state’s general fund so as to help reduce the state’s budget deficit.

    I take the “standard deduction” on my federal taxes and so I’m unable to deduct the uncashed PFD check donations. So even though I don’t keep a penny of it, I still have to pay taxes on it.

    I wish there was a way that I could request that they only send me a $100 PFD check.

    Of course, I could just not apply for the PFD. But I like applying for the PFD. It’s tradition. I’ve been applying for it since it first came out in 1982. I used to stuff all the money in my pocket, from 1982 to 2014. So now it’s a habit that I don’t want to break (even though I can’t stand the thought of taking one penny of it, for the past 4 years).

    As for everyone else who wants to pocket the money, the size of the PFD should be based on a sliding scale that reflects the amount of available surplus money.

    The present PFD formula that is in statute (Alaska Statute 37.13.145 and 43.23.025) says that the amount of the PFD is equal to 50% of the Permanent Fund earnings (averaged over the past 5 years). This old statute should be modified to reflect present day fiscal realities.

    The new statute should state that the annual PFD payout “shall be based on a sliding scale between 5% and 60% of Permanent Fund earnings (5-year average) depending on several factors such as budget surplus availability, debt obligations and Constitutional Budget Reserve replenishment requirements.”

    A sliding scale for the PFD will motivate all citizens (whether they have no income, low income or high income) to want to reduce wasteful government spending, so as to increase the size of any available budgetary surplus.


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