First the House budget had no PFD. Now there’s a ‘full’ PFD of well over $3,500. Don’t expect either.

‘Statutory’ dividend OK’d by Finance Committee as it sends spending plan for next year to floor vote, but most of the payout requires a three-fourths vote by legislators

House Finance Committee Co-Chairs Neal Foster, D-Nome, Andy Josephson, D-Anchorage, and Calvin Schrage, I-Anchorage, listen to discussions about next year’s proposed budget on Tuesday, March 31, 2026. (Mark Sabbatini / Juneau Independent)

By Mark Sabbatini

Juneau Independent

"It will have the effect of giving the impression to the Alaskan people — to some people — that they're getting a massive dividend," House Finance Committee Co-Chair Andy Josephson said Wednesday night. "It will absolutely have that impression. I'm not creating that impression, but it will be there in tomorrow morning's paper."

The committee did pass a headline-grabbing amendment during its late-night meeting by adding a "full" Permanent Fund Dividend well in excess of $3,500 to a proposed state budget for the fiscal year that starts July 1. But committee leaders said that payout is just as implausible as the $0 PFD in an early draft of the budget introduced in February, which at the time was characterized as a placeholder.

On Wednesday, as the committee was nearing the end of debate on dozens of amendments, a proposal to add what advocates call a "statutory" PFD was approved by a 6-5 vote. It allocates a total of about $2.47 billion for dividend payouts and administrative costs, which would mean a PFD exceeding $3,650 since Gov. Mike Dunleavy’s budget contains a payout of that amount based on $2.37 billion in total funds.

Here’s the big caveat: Of the $2.47 billion, about $1 billion comes from the state’s general fund and the remainder from the $3 billion Constitutional Budget Reserve. It takes a three-fourths vote of both the House and Senate to tap the reserve, and legislative leaders say that won’t happen to fund the House budget’s PFD.

"I think it would set up false expectations and be fairly disingenuous," Rep. Calvin Schrage, I-Anchorage, another co-chair of the Finance Committee, said as the amendment was being debated. "I think the likelihood that we would get a three-quarters vote to draw such a substantial amount of money from the CBR, (and) draining approximately half of our primary savings vehicle for economic downturns or other major disruptions, I don't think the votes are there."

"And so it puts a full PFD into the budget in concept, but the votes would not be there to fund it and so it would give people false hope just for the rug to be pulled out from under them."

"Statutory" PFDs are based on a formula that was abandoned in 2016 under former Gov. Bill Walker, with the Alaska Supreme Court subsequently declaring the payouts weren’t mandatory. Dunleavy has proposed such dividends in all eight of his budgets and the Legislature so far has rejected all of them.

The amendment for a full PFD was introduced by Rep. Frank Tomaszewski, R-Fairbanks, with his version calling for the full $2.47 billion to come from the general fund. Rep. Jeremy Bynum, R-Ketchikan, introduced the provision taking most of the money from the CBR, which like the amendment itself passed by a 6-5 vote.

"I think the PFD is an important part of this budget and, as of right now, there is no PFD in this budget," Tomaszewski said just before the committee’s vote. "The people of Alaska are hurting right now. We have high gas prices, we have disasters, we have cold extreme weather. We have difficult circumstances. We have high energy costs. This is the best time to give a full and statutory PFD. It can be done."

"This amendment follows statute, it follows the law. And I ran on the premise of following the law and I'm going to vote for that."

A similar argument was voiced by Rep. Neal Foster, D-Nome, the committee’s other co-chair and the only member of the majority caucus to side with five minority caucus members in voting for the amendment.

"I made an impassioned speech yesterday explaining why Alaskans deserve their share of Alaska's resource wealth consistent with the PFD formula that currently exists in law," he said. "This is the people's money and so I will be voting ‘yes’ for this full statutory PFD."

The budget will next go to a House floor vote, where another extensive round of amendments are likely to be debated before a vote on its passage. It will next go to the Senate where it go through a similar process, after which a conference committee of members from both chambers will likely meet to resolve differences in crafting a final bill to send to Dunleavy.

If the House’s version of the budget was signed into law — but the vote on tapping reserve funds failed — a $1 billion total allocation would amount to a dividend of roughly $1,500.

Legislative leaders have warned for the past couple of years Alaska is in a lean fiscal period due to dropping oil prices and production, which among other things resulted in a budget last year with a $1,000 PFD that was the lowest in history when adjusted for inflation.

The month-old war in Iran has caused a huge upward spike in oil prices, and the Alaska Department of Revenue stated last month the state could see more than $1 billion in extra revenue this year and next if the impact on prices lasts for months. But both revenue officials and lawmakers say the situation is unpredictable and Alaska can’t count on those funds, nor that the longer period of financial hardship won’t continue until new oil and gas projects come online several years from now.

• Contact Mark Sabbatini at editor@juneauindependent.com or (907) 957-2306.