Americans to Get Guaranteed Direct Payment Under New Amendment

Alaskan lawmakers are considering a constitutional amendment that would guarantee residents receive part of the state's oil revenues every year, according to a statutory formula.

This would be instead of letting the legislature decide about it—as they have done for the past eight years. In 1976, the state created the Alaska Permanent Fund with the idea of saving at least 25 percent of its oil revenues for investing in bonds, stocks, real estate and infrastructure in the interest of future generations. Since 1982, residents have also received part of these earnings directly through the Permanent Fund Dividend (PFD) in the form of annual checks, though this is not a constitutionally protected practice.

The fund, according to the Alaska Permanent Fund Corporation, is now worth a total of over $77 billion, with $56.7 billion considered as the principal part of the fund, meaning they are non-spendable.

For years, the amount received by Alaskans was calculated according to a fixed formula based on the PFD's net income. However, that practice was abandoned in 2016 when then-Governor Bill Walker, an independent, decided the PFD should be subject to the same appropriation and budget process as other state spending.

Now, Ways and Means Committee chair Rep. Ben Carpenter of Nikiski, a Republican, is trying to go back to the old ways.

"While the legislature could choose to follow the law and appropriate the dividend according to statute and separate it from the budget, they have not done so," Carpenter wrote in a statement. He is sponsoring a proposal—House Joint Resolution 7—which would require Alaskan lawmakers either to approve a new formula or go back to using the old one.

Carpenter added: "Instead, the permanent fund dividend has been subjected to the budget process, where the dividend competes with government spending and often becomes the deficit reduction solution."

Carpenter said that "neglecting to constitutionalize the PFD would permit lawmakers to continue avoiding their obligation to address the shortcomings of Alaska's fiscal and economic planning, placing the Permanent Fund at risk."

The state House of Representatives started discussing the proposal on Wednesday, but the proposed change is a contentious issue in the state.

Opponents fear that the constitutional amendment might force the state to pay more than it can afford to by using the old formula. Alaska is already struggling to allocate funding for public services including education and health care—especially as the state has neither personal income tax nor statewide sales tax.

In 2023, the PFD amount was $1,312, and the checks will be paid out over 2024. Alaska Public says the dividend, which is roughly $3,500 under the existing formula, would cost the state $2.3 billion in 2023—meaning they would be close to $1 billion in deficit.

Rep. Andy Josephson of Anchorage, a Democrat, told Newsweek that HJR 7 "would essentially bankrupt Alaska." According to Josephson, the amendment would say that the permanent fund dividend "is the most important thing the government provides its citizens... bar none."

"It would instantly create about a $1.2 billion deficit, year over year, forever... without any path forward to fix it," Josephson added. "It would make the dividend the politically most powerful thing in state government. Opponents of reducing the formula to something more manageable would be in the proverbial driver's seat, always able to simply reject any reasonable reform."

According to the Democrat, the amendment would make "the weakest legislature in America even weaker," removing $2.3 billion per year "from having to compete in any way with other items that need appropriating" and suffocating "expenditures for public health, public safety and public education. Those interests would be fighting over scraps."

Newsweek contacted Carpenter for comment by email on Friday.

Update 3/8/24, 10:45 a.m. ET: This article was updated to include a comment from Josephson.