The Alaska Permanent Fund Corp. sign at its office on Juneau on March 14, 2016. (Photo taken by Skip Gray/KTOO)

Ineligible Alaskans are eligible to receive a payment of approximately $1,300 on October. 5. from the sovereign wealth fund of the state. The amount of the Permanent Fund Dividend was initially set using a complex formula and since the state ceased using the traditional calculation in the year 2016 and the legislature has had to find new formula.

James Brooks covers the legislative session on behalf of The Alaska Beacon, and he said to the Alaska Public Media’s Michael Fanelli that lawmakers settled on the $1,300 figure after a lengthy discussion that has been going on for years.

Listen:




The transcript below has been lightly edited to improve clarity.

James Brooks: It was the final day of a major cycle of back and forth that has been each year since around the year 2018, and possibly prior to that. Since the fall in oil prices in 2015 the state has operated without a reliable formula for determining the annual permanent Fund Dividend. It is essentially set by a an annual fiat in the state legislature. The legislature will discuss the issue with members before deciding on the number. This year, it’s $1,300 for each recipient. This is $880 million that will be withdrawn from the state’s Treasury and be sent to Alaskans.

Michael Fanelli: Wasn’t there a provision to pay an additional $500 in the event that the prices for oil were too high? Does this apply to this year or will it only apply in the future?

James Brooks: It’s the year next and at the moment, oil prices look decent. It’s likely that we’ll receive that additional $500 and it is an election year in the year following. If you’re a skeptic and you think, “Well, there’s a significant incentive to ensure that this happens this year.” Also, the oil prices are sufficient to have an impact on — and you may have more events happen in the coming year, based on whether they remain that way.

Michael Fanelli: Gotcha, okay. Talk to me briefly about what the debates were at in both the House and Senate. What was the debate like? What were the different sides pushing for?

James Brooks:The debate’s been similar since the year. In 2018 if you’re able to remember the legislature was grappling with the massive crash in the price of oil that had occurred a few years prior to the crash. The state legislature as well as the governor had reduced the budget, but it wasn’t enough. So what they decided to do was spend the money taken from the Permanent Fund on state services this was the first time they did it in such a large manner.

It’s a problem that, while they were putting together this system, they were unable to reach a consensus on the new method for dividends from the Permanent Fund Dividend, because the formula that’s in force and hasn’t yet been updated was not written with the concept for this kind of distribution in mind. So lawmakers are making decisions, “Well, what replaces the old formula?” And the general concept is that every year the dividend is split into two parts with dividends, a portion and a part for services. However, the exact split not yet decided. This has been the debate for the last five years. So we’re with a dilemma that there’s no agreement about what should replace the old formula.

Michael Fanelli: In July, you published an article about an new forecast by the Permanent Fund Corporation that predicted that the portion with spendable funds will be exhausted in 3 years. What do you think that will happen? to affect the discussion the next legislative session?

James Brooks: If there’s a way to make it possible to end the annual debates about the dividend and create an entirely new formula and a new dividend formula, it’s this. This seems to be the next brick wall the state’s fiscal vehicle is accelerating toward at present. If the trend continues, and nothing is completed then there will be no annual withdrawal to the Permanent Fund to the state Treasury for a couple of years.

This is the biggest issue in the state, and it has been for about for eight years. It’s going to require a lot of effort to make a change from where we are. The elections next year could change the direction a bit however it will require an entire shift or something incredibly drastic such as that of the Permanent Fund running out of spending money to cause things to alter.