Ahead of special session, Alaska lawmakers consider phasing in PFD changes along with new revenue

Sen. Lyman Hoffman, D-Bethel; Rep. Jonathan Kreiss-Tomkins, D-Sitka; and Rep. Kevin McCabe, R-Big Lake, attend a comprehensive fiscal plan working group meeting on July 23, 2021, at the Anchorage Legislative Information Office. (Photo by Andrew Kitchenman/KTOO and Alaska Public Media)
Sen. Lyman Hoffman, D-Bethel; Rep. Jonathan Kreiss-Tomkins, D-Sitka; and Rep. Kevin McCabe, R-Big Lake, attend a comprehensive fiscal plan working group meeting on July 22, 2021, at the Anchorage Legislative Information Office. (Photo by Andrew Kitchenman/KTOO and Alaska Public Media)

The Alaska Legislature has nine days to go before the scheduled start of a special session. And it’s not yet clear whether a working group of lawmakers will recommend proposals the rest can consider during the session. 

The working group is weighing whether to recommend amending the state constitution. 

Gov. Mike Dunleavy has proposed putting permanent fund dividends in the constitution. He wants to spend 50% of the money drawn annually from the permanent fund on PFDs. The other 50% could pay for state services. 

Group co-chair Sen. Lyman Hoffman raised the possibility of phasing in new revenue. He spoke at a working group meeting on Thursday.

“One concept could be that we would agree to the 50/50 split, but we would have to come up with a stair-stepped approach until the revenue measures came into place,” Hoffman said.

Hoffman is a Bethel Democrat who caucuses with Republicans. Dunleavy is a Republican.

Currently, the PFD amount under a split would be roughly $2,350. That’s nearly twice the average paid over the past five years. But it’s more than one-third lower than what would be paid under the formula in state law. 

But without new taxes or spending cuts, the state would spend more than $922 million than it raises each year. 

Hoffman said the dividend could be phased in as new revenue measures go into effect.

Palmer Republican Sen. Shelley Hughes is a working group member who called into the meeting on Thursday. She said there’s an advantage to not cutting dividends to close the gap: Only Alaskans receive dividends.

“When you use part of the PFD to close that revenue, it impacts residents only,” Hughes said. “Other forms of revenue impact nonresidents as well.”

The working group is weighing several proposed constitutional amendments that would protect permanent fund earnings and limit how much money is drawn from the fund each year. 

Andrew Kitchenman

State Government Reporter, Alaska Public Media & KTOO

State government plays an outsized role in the life of Alaskans. As the state continues to go through the painful process of deciding what its priorities are, I bring Alaskans to the scene of a government in transition.

Read next

Site notifications
Update notification options
Subscribe to notifications