The latest History and Projection report from the Alaska Permanent Fund Corporation reveals some interesting data. The statutory Permanent Fund dividend (which has not been paid since 2015) would consume over 80% of the structured draw that was passed by the Legislature in 2018. The report includes the FY 2022 actual Percent of Market Value (POMV) draw, the actual FY 2022 statutory dividend, the FY 2023 actual POMV draw, and the projected FY 2023 statutory dividend.
The statutory dividend for FY 2022 is just over $2.5 billion, which would translate to an approximate $3,500 dividend. The POMV draw – which limits the amount of Permanent Fund earnings the state can spend – is just over $3 billion for FY 2022. Meaning if a full PFD were paid, only $559 million would be left from the POMV draw for state spending. In that scenario, the budget deficit would be around $2 billion. For FY 2022, the statutory dividend is almost 82% of the POMV transfer. Since former Governor Bill Walker vetoed the dividend in 2016, a full statutory dividend has not been paid. The Alaska Supreme Court ruled that the dividend is ultimately subject to legislative appropriation.
The actual POMV draw for FY 2023 is over $3.3 billion. The projected statutory dividend for FY 2023 is nearly $2.7 billion, which would translate to an approximate $3,800 dividend. The five year average for the POMV draw starts one year before the previous fiscal year. FY 2023 is the first year the POMV includes the more than $80 billion ending balance for FY 2021. The calculation for the statutory dividend is the previous five fiscal years, so FY 2022 net income is a projection. For FY 2023, the statutory dividend is projected at just over 80% of the POMV draw.
The POMV draw is calculated by taking 5% of the ending fund balance from the average of the five previous fiscal years (starting one year before the current fiscal year). The statutory dividend is calculated by taking the average statutory net income from the Permanent Fund for the previous five fiscal years, and then dividing that amount by two. The POMV statute and the dividend statute, which are both on the books, are in conflict.
Governor Mike Dunleavy (R – Alaska), who has long promoted the statutory dividend, came out with a new plan earlier this year. He wants to put the Permanent Fund in the Alaska Constitution and then split earnings 50/50 – 50% for dividends and 50% for state spending. But that requires 2/3 of both the House and Senate agreeing, and the voters approving the constitutional amendment.
If the 50/50 plan were in place, and the draw remained at 5%, there would be approximately $1.5 billion for dividends and $1.5 billion for state spending for FY 2022. That would translate to an approximate $2,100 dividend. But with only $1.5 billion for state spending, the state would face a nearly $1 billion deficit. This is based on an estimated $2 billion from oil taxes and other state revenues, and a $4.5 billion budget.
Some legislators have suggested a state income or sales tax to help close the deficit. Some have suggested raising oil taxes. Others say it should be a combination. While others say without a dividend, the state would be at a surplus with no personal taxes. The issue has plagued the Legislature for the last five years. Dunleavy has yet to introduce any revenue measures, though his Department of Revenue recently asked the Legislature’s fiscal plan working group to present some ideas.
The other interesting projection from the report is what the Permanent Fund estimates what the the balance of the fund will be in FY 2030. Based of a 6.4% return, the value of the Permanent Fund would top $100 billion by FY 2030.
🤔 The statutes aren’t in “conflict” from a statutory perspective. Here’s how they work (using $$FY20): https://bit.ly/3lpbC0T
The problem is, the #akleg has committed to more in UGF spending than the statutory revenue streams support. That’s not a “conflict” between the statutes. Its a problem that, instead, requires add’l revs (not automatically from PFDs).
The “statutes” worked when we had the oil revenues and the Permanent Fund income was all “gravy” to save and hand out. We don’t have those oil revenues any longer (and never will). Dunleavy proved you can’t “cut” spending to make his populist pandering a reality. So now Dunleavy and his fellow e desperate populist panders want to create a Constitutional Amendment to force them to tax us to pay ourselves a PFD? You can’t make this stuff up…..
Lynn
Have you go to a gas station recently.
The price of oil has risen. The PFD has risen by 20 billion and covid money has poured in also.
We are not broke or going broke. The PFD the people who want it money.
And BS on on you oil price projections.
If you would have invested in the last 3 years in oil you would have doubled your position in that sector.
I suggest you (and so many others) apparently fail to realize that if you are producing half the oil at even double the price you have gained nothing. That “masking” of state revenues when oil had such high prices is what set us on this path to fiscal jeopardy. And where is Parnell’s “million barrels a day” that was going to solve all our problems if we just gave back even more to the producers?
This “stuff” never should have to have been made up. Former Governor Hammond stated many, many times that when the time came, for any year where state revenues were projected to be insufficient to cover state spending, an income tax was to be reimposed. When that time came, the legislature refused to even consider the only realistic, responsible option available to them for revenue and Governor Walker stopped the statutory PFD. That’s when this train went off the tracks. It’s reprehensible the PFD is now being illegally appropriated by the legislature to cover government spending. It never should have been,… Read more »
dunleavy demanded the state only steal half of the people’s permanent fund, and it was still
not good enough for these people. the politicians want it all. they will steal every penny unless
we grab our pitchforks and scythes and stop them.
“The people” is the state. They are not spending “your” money. They are spending the people’s/state’s money. “Our” money. You may disagree on how it is being spent (Niki Tshibaka’s made up job for example) but it is the state’s/peoples’s money.
You’re confused. Carl is not. The Permanent Fund and its earnings were always intended to be for the people. The State of Alaska has many other ways available to it to obtain the revenue it needs to operate and has the power to do so. There was nothing that forced the legislature to wrongfully begin appropriating the people’s Permanent Fund to finance itself. It was not prevented in any way from reimposing the state’s former income tax, as former Governor Jay Hammond suggested would eventually need to be done. Nothing prevented the legislature from enacting a state sales tax or… Read more »
The government is just expending more , the PFD belongs to the people of Alaska not there private houses, Jets and expensive vacations. How about stop giving yourself a raise and think of the people you work for , the Same way we vote you in , we can vote you out.
Hell yeah the permanent fund is for the PEOPLE not the state, who give themselves raises any time they think they need one. It’s BS and it’s time THE PEOPLE put an end to it, you think that they themselves are worried about putting food on the table, hell no and they could care less about the child starving as long as they get theirs. LEAVE OUR PERMEANT FUND ALONE AND DO WHAT HAMMOND INTENDED AND GIVE IT TO THE PEOPLE!!! Do your job and figure out state spending instead of stealing OUR PERMEANT FUND and earn the HUGE pay… Read more »