News-Miner Editorial

Time to review the PFD: Legislature should consider a new way for calculating the annual dividend

News-Miner opinion: The dividend is dividing us. That should be abundantly clear now to even those who don’t pay much attention to politics.

The Alaska Permanent Fund dividend this year has become the linchpin, roadblock, whatever you want to call it, in the ongoing budget debate between the governor and Legislature and within the Legislature itself.

What should be clear — but isn’t to enough people — is that the dividend should be subject to the state’s budget pressures like most any other item in the state operating budget.

To treat it as something separate, something inviolable, like Gov. Mike Dunleavy has done, is to handicap any discussion about Alaska’s fiscal problem.

The governor writes in a notation that appears with 160 of his 182 line-item vetoes that “The State’s fiscal reality dictates a reduction in expenditures across all agencies.”

That statement should also certainly apply to the dividend.

It’s worth looking at the original intent of the dividend when the Legislature created it in 1980 and Gov. Jay Hammond signed it into law.

Was the dividend intended solely to be distributed just as a share of the state’s energy wealth?

Not exactly. It was considered more as a reward, suggesting it was never intended to become the hamstringing entitlement that many perceive it as today.

The original statute listed three purposes of the dividend. The first was “to provide a mechanism for equitable distribution to the people of Alaska of at least a portion of the state’s energy wealth derived from the development and production of the natural resources belonging to them as Alaskans.”

The argument underpinning that section, though, as articulated by the state in defense of the dividend program in a case brought against it by residents Ron and Penny Zobel, was indeed that the dividend is a reward.

The state, in a brief filed with the Alaska Supreme Court and which was also referenced by the U.S. Supreme Court, argued the first purpose of the dividend — providing for an “equitable distribution” — was to recognize “contributions of various kinds, both tangible and intangible” that residents have made while in Alaska.

The first dividend program, although struck down by the U.S. Supreme Court, was a reward program, that is clear.

And the other two purposes listed in that original dividend legislation?

“... to encourage persons to maintain their residence in Alaska and to reduce population turnover in the state,” and “to encourage increased awareness and involvement by the residents of the state in the management and expenditure of the Alaska Permanent Fund.”

As a reward program, one should be able to infer that the dividend today is not inviolable and that subjecting it to the circumstances of our greater fiscal situation is appropriate.

The dividend has become so entrenched in the lives of Alaskans that politicians find it difficult to reduce when needed to help pay the cost of state government. Former Gov. Bill Walker had the courage to do so three years ago and did so again the past two years with support from a majority of the Legislature. It cost Gov. Walker a second term.

Alaskans need to remember that the purpose of the permanent fund itself, the corpus, is to help provide government services for future generations of Alaskans as nonrenewable resources are depleted. The purpose of the dividend that derives from the fund’s earnings is to protect the corpus from legislative attack — not to enrich individual Alaskans.

The dividend isn’t holy ground that should never be trespassed. Even former Gov. Jay Hammond, the force behind creation of the dividend, knew that.

In his 2011 book “Diapering the Devil,” the former governor made a crystal clear statement about large dividends that is supremenly relevant today. Lamenting the 1980 repeal of the state’s income tax, he wrote, “It makes little sense to pay out ever-increasing dividends if we have in place no means of recouping whatever is necessary to fund essential government programs.”

Alaskans need to look to the past when discussing the dividend’s role in our state’s future. The dividend is not an entitlement for individuals. Its funds must be available to help as needed in times of the state’s financial stress.

Alaska’s fiscal problems aren’t going to magically disappear in the next year or two — or who knows when. The Legislature should consider finding a new way to calculate the dividend in these uncertain times.

The Daily News-Miner encourages residents to make themselves heard through the Opinion pages. Readers' letters and columns also appear online at Contact the editor with questions at or call 459-7574.

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The Daily News-Miner encourages residents to make themselves heard through the Opinion pages. Readers' letters and columns also appear online at Contact the editor with questions at or call 459-7574.

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