PHOENIX - Alaska Gov. Bill Walker is pushing to use the Alaska Permanent Fund, traditionally used for payouts to Alaska citizens, to help close the state's budget gap.
The Permanent Fund, an investment pool seeded by oil royalties, was founded by state constitutional amendment in 1976.
Each year, Alaskans receive a permanent fund dividend (PFD) based on the average income of the fund over the previous five years. Walker's administration broke from tradition this week by announcing the exact size of those checks. Beginning Oct. 1, more than 644,000 Alaskans will each receive $2,072 - the largest PFD payout in state history.
Walker has been suggesting that the state consider using the Permanent Fund to bankroll state services as part of a solution to close the state's $3.5 billion deficit. To date, the Alaska Permanent Fund is worth over $51.4 billion. Since 1982, just over $23.3 billion has been distributed to Alaskans through PFD checks. Walker tried to make his point more clear Sept. 21 when he asked a 12-year-old named Shania Sommer to reveal the size of the PFD during a press conference.
"We are paying out more in PFD checks than we are for the education of young Alaskans like Shania—at a time when we are struggling with a $3.5 billion deficit," Walker said. "Alaskans need to know this is unsustainable. I'm confident Alaskans will pull together to find a solution, as we always do when times are tough."
Triple-A rated Alaska's energy-dependent economy has been hit hard by a sharp drop in oil prices, and Walker and other state officials have said that no amount of austerity measures could possibly erase the deficit. The state has already dropped some 600 employees in recent months.
Standard & Poor's cited the budget deficit when it put Alaska and its nearly $1 billion of GO debt on negative outlook. Walker and Lt. Gov. Byron Mallott met more than 20 of Alaska's prominent business leaders earlier this month to discuss the economy and possible revenue options. They discussed the Permanent Fund, according to a subsequent release from Walker's office, as well as the possibility of implementing sales or income taxes.
"Across Alaska, we are laying off school teachers, cutting trooper posts, and scaling back services provided by the state," Walker said this week. "It is time to have an open and honest conversation about our finances, and how resources like the Permanent Fund can be used as an asset. The vision of the Permanent Fund was to turn a nonrenewable resource into a renewable one, and it is our job to determine how to best use and protect that gift for the benefit of all Alaskans."
