Dunleavy’s budget has a $3,650 PFD. The House’s is $0. Neither is close to reality. So why do it?
- Mark Sabbatini
- 19 hours ago
- 4 min read
Lawmakers say the proposals are part of a complex and uncertain budget process — but are they misleading residents who take them seriously?
By Mark Sabbatini
Juneau Independent
Alaskans aren’t getting a $3,650 Permanent Fund Dividend this year, nor one of $0, even if those are the amounts in competing draft budgets by the governor and Legislature.
The prevailing wisdom inside the Capitol is the budget for the coming year will look a lot like this one, including a PFD similar to the $1,000 paid out last year.
"As I’ve said repeatedly, there will be a dividend," Rep. Andy Josephson, D-Anchorage, said in an interview Monday. "It's probably going to be in the $750 to $1,400 range."
But House majority members stirred up plenty of unrest last week by setting the PFD at $0 in its draft budget. The move is akin to Gov. Mike Dunleavy submitting a proposed budget with a PFD of $3,650 last December, in the sense nobody voting on the budget expects either to be the actual dividend amount.
Both are essentially "placeholders" or "starting points" as lawmakers assess, negotiate and await an abundance of fiscal factors that will affect what the final budget — and PFD — look like.
Right now a $3,650 PFD would result in a $1.5 billion deficit in a roughly $14 billion budget next year, while a $0 PFD would result in about an $800 million surplus in a $12 billion budget. However, a $1,000 PFD wouldn’t necessarily equate to a "balanced" budget since, among other factors, oil prices are expected to be lower next year than this year.
The state has $3 billion in the Constitutional Budget Reserve to cover shortfalls, but lawmakers already are being asked during the coming weeks to spend $425 million of that on supplemental costs in the current year’s budget. That means if the governor’s $3,650 PFD was approved lawmakers would be looking at draining nearly $2 billion from the $3 billion reserve — a scenario they agree isn’t realistic or desired.
Dunleavy has proposed PFDs in each of his eight budgets, declaring he is submitting the amount required by a state law that dividends were based on for decades. However, that formula was abandoned in 2016 under Gov. Bill Walker, with the Alaska Supreme Court subsequently declaring the so-called "statutory" payouts weren’t mandatory. The Legislature has rejected all of Duneavy’s proposed dividends under that formula while he’s been in office.
Plenty of voters appear to be taking the two current proposed PFDs at face value, regardless of a plentitude of media reports and public statements by a wide range of policymakers seeking to put those divisive dividends in context.
"Alaska House Democrats just ZEROED OUT the PFD in their first draft budget," wrote Burt Hestand in a post at the public Facebook page Open Friends of Kodiak that was typical of objections statewide. "Not reduced. Not trimmed. GONE. They took the entire Perfent[sic] of Market Value (POMV) draw for government spending and left Alaskans with $0. In an election year no less."
A similar situation arose a year ago when the bipartisan House majority included the governor’s proposed "full" PFD of about $3,800 in an early budget draft, which resulted in residents offering public testimony thanking the House Finance Committee for the inclusion. Except, as Josephson acknowledged at the time, there was no intention to keep the full dividend since it would result in a $2 billion deficit in the $14 billion budget for the current fiscal year.
“It’s just that we were focused on some basic changes that were rather perfunctory in (our substitute for the governor’s proposal) and so we didn’t adopt every change we were going to make," he said in March of 2025. When asked if that approach gave residents false hopes of a full PFD he called it a lesson learned.
But a seemingly similar maneuver occurred last week when the House Finance Committee voted 6-5, along majority-minority caucus lines, to adopt an initial draft budget that zeroes out funds for a PFD. Josephson said Monday that nixing those funds was part of a broader — and common — procedure where all increases in the governor’s proposed budget are zeroed out so the committee is using the current year’s budget as the "status quo" starting point in crafting next year’s spending plan.
"This important fact — very important — is five of the last eight operating budgets have been ’zeroed out,’" Josephson said.
When asked why the majority members didn’t include a "status quo" PFD of $1,000 in the draft budget, Josephson cited the uncertainty about how much money will be available until the state’s official spring revenue forecast, which typically is issued in March.
"If we put in a number now before, for example, the spring forecast, we can't know in any fine-tuned sort of way, what the number might ultimately be," he said. "And so if somebody signs off on a committee substitute of $1,000 it leaves the impression that they want $1,000."
The approach didn’t find favor with the all-Republican House minority, as evidenced by their dissenting committee votes.
"When I hear the co-chair of finance talking about all the things that he's going to spend money on and he deposits the entirety of the PFD into the general fund that makes me kind of think that we're not taking this deficit very seriously at the moment," said Rep. Will Stapp, R-Fairbanks.
The operating budget has many more steps to go — including public testimony and then a lengthy amendment process — before it passes out of the House Finance Committee and to a floor vote. At that point the Senate will go through a similar process and, if the pattern from most years continues, leaders from both chambers will then meet near the end of the session to draft a compromise budget that includes the final amount allocated to PFDs, which will provide at least an estimate of what eligible residents will receive.
• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.
