PFD working group advises staying within rules-based draw system

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ANCHORAGE (KTUU) A working group established to make recommendations on the future of the Permanent Fund has not given specific guidance to the Legislature on how or if the PFD formula should be changed.

In June, the joint working group was established to discuss the future of the Permanent Fund. On Monday, its strongest recommendation was that the Legislature should stay within the rules-based system created by Senate Bill 26 in 2018 that prescribes a sustainable annual draw from Permanent Fund earnings to pay for state services and the dividend.

Rep. Jennifer Johnston, a Republican from Anchorage, said that recommendation was significant because some lawmakers in 2019 had sought to overdraw the Permanent Fund.

The working group did examine three scenarios that could guide discussions for lawmakers for the session ahead: one where the statutory PFD formula would remain unchanged, another where the PFD would be set at $1,600 and a third where a dividend would be paid after state services are funded.

The 40-page report from the group did not lean toward any particular proposal but it did scrutinize the costs associated with each, including the possibility that new revenues would be needed to bridge a fiscal gap.

Sitka Republican Sen. Bert Stedman echoed the other members of the working group in saying that his priority is protecting the Permanent Fund for future generations. His goal is to move as much of the fund’s earnings from an account that can be spent with a simple majority vote of both the House of Representatives and the Senate to the constitutionally protected Permanent Fund corpus.

“As long as there’s billions of dollars sitting there to be easily spent it’s just a target,” he said.

With a $1.5 billion deficit, whether the PFD formula should be amended to deliver a smaller dividend and shrink state spending will likely be a big topic of discussion in the months ahead. Gov. Michael Dunleavy has said the dividend formula should only be changed after approval by a vote of the people.

The Alaska House and Senate are set to both gavel into session Tuesday at 1:00 p.m.