UPDATE: This story was updated on Sept. 28, 2016 to include the exact number of qualified PFD applicants for 2015 at 643,678. Some of the math in the story had to be adjusted accordingly.
What looks to have been on track to be the third largest Permanent Fund Dividend ever paid Alaskans officially died Friday with Gov. Bill Walker’s pre-recorded announcement that his capped dividend for 2016 will be $1,022.
Walker was in Singapore trying to sell Alaska gas when the announcement took place. The pre-recorded video, which featured a scripted “interview” of the governor conducted by Palmer middle-school student Shania Sommer, did not disclose what the size of the dividend would have been had not the governor vetoed more than $666 million from the Permanent Fund account.
At the time of Walker’s veto, he said he was capping the PFD at $1,000. To pay those dividends, he left $695,650,000 in the Permanent Fund account. The $1,000 PFD calculation for 2016 was based on a predicted 695,000 people qualifying for the dividends by spending 2015, or most of it, in Alaska.
The check grew from $1,000 to $1,022 because the number of qualified applicants came in smaller than expected.
The governor reported only 643,000 qualified for a PFD this year. Sara Race, the director of the Permanent Fund Division in the Department of Revenue, is now pegging the exact number at 643, 678.
Because of the lower than expected number of qualifying applicants, everyone who qualified got an extra $22. Those who failed to qualify, of course, got nothing.
The PFD calculation is complicated. After earnings from the Permanent Fund Corporation, which manages the fund, are transferred to the state, there are predetermined deductions made for the Departments of Health and Social Services, and Corrections. Then there are withdrawals made to cover the costs of managing the Permanent Fund and maintain a reserve account.
Last year, HSS received about $18 million and Corrections about $21 million. About $8 million went to pay for management, and about $1 million was put in the reserve.
All told those withdrawals amounted to about $48 million.
Using last year’s figures, plus this year’s transfer to the state Permanent Fund account, one can roughly calculate what the 2016 PFD would have been sans veto.
The $666,350,000 Walker vetoed plus the $695,650,000 that actually made it into the dividend fund totals $1,362,000,000. Subtract $48 million in deductions as calculated above and the pool of funds to be divided between Alaskans comes to $1,314,000,000 or just a hair over $1.3 billion.
Last year, that amount of money would have provided a dividend of only 1,938.54. But this year, given only 643,678 applicants, the pay out would have been about $2,052.
That’s $20 short of the record $2,072 last year. The previous record was $2,069 in 2008. Those are the only years the dividend has topped $2,000 since the program began in 1982.
Walker said he needed to take money from the PFD to help cover the state’s more than $3.5 billion budget deficit. The state of Alaska is in the midst of a financial crisis. The state Legislature refused to go along with a PFD-cutting plan this year, but Walker got around their resistance by vetoing funds earmarked for the dividend fund.
He is now being sued by a Democrat state senator and two former Republican state Senate Presidents who contend the governor lacks the authority to veto the money. They argue that the PFD is a direct transfer from the voter-approved, Constitutionally-created Permanent Fund to the Revenue Department, and not a legislative appropriation.
The governor cannot veto directed funds. The Legislature would have to amend the law to allow that.
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The legislature could have easily over rid his veto.