Permanent Fund Dividend time is almost here, and while many are eagerly awaiting that $1,000 bonus just for being a qualified Alaska resident, others figure it should be nearer to $2,100, and have taken the matter to court.
A lawsuit filed on Sept. 16 in Alaska Superior Court in Anchorage asks that the state’s Permanent Fund Corp. be ordered to transfer the full amount originally set side by legislators for dividend checks. That’s a total of $1.4 billion – rather than the $695 million left after Gov. Bill Walker used his veto powers to cut PFD funds, in part of his effort to resolve the state’s financial crisis brought on by low oil prices.
A copy of the lawsuit is online at https://s3.amazonaws.com/arc-wordpress-client-uploads/adn/wp-content/uploads/2016/09/16121915/img-916122231-0001.pdf
Walker said the state can’t afford those high annual dividend payments, which have over the last 34 years paid out a total of $39,099.41 apiece to every Alaskan eligible to receive every annual check since 1982.
While 17 of those checks, including the first one, have been for at least $1,000, the other 17 have been for less than $1,000. Last year’s check for $2,072 was the highest on record, and without the veto, this year’s would have set a new record.
Sen. Bill Wielechowski, D-Anchorage, filed the lawsuit as an individual, rather than in his capacity as a legislator, along with former Alaska Senate Presidents Clem Tillion and Rick Halford, both Republicans, and co-counsel Andy Erickson, an Anchorage attorney.
The reaction to the lawsuit has been “unbelievably positive,” said Wielechowski, who said the plaintiffs would seek expedited consideration of their case.
Under regular court rules, the state has 40 days to respond, he said.
“It is not an easy case,” Wielechowski said. “I feel the law is on our side. I feel like we should win, but they (the state) have strong arguments on their side too.”
The case is likely to go to the Alaska Supreme Court, he said.
Wielechowski also posted a letter on his Facebook page to fellow Alaskans, saying that he, Tillion and Halford did not take lightly their decision to file the lawsuit.
“We’re filing this lawsuit today because Alaska needs an answer,” he said.
“We need to know who decides the amount of the dividend, a governor or the Legislature” At a time when we are once again being asked to give up our dividends, I think it’s critical that we look to the courts for resolution to this question now.”
Wielechowski said that while there is no doubt about the severity of the fiscal crisis the state faces, “during a fiscal crisis, the last thing we should be doing is pulling $700 million straight out of our economy, and that’s just what cutting the dividend would do.
Wielechowski also noted, in response to reaction to news reports on the lawsuit, that he made a motion to go into a joint session to overturn the governor’s veto during the legislative session. The motion was illegal, according to Wielechowski, ruled out of order by Senator John Coghill.
“I appealed his ruling and the Republican majority voted to uphold this illegal ruling,” he said.
The governor’s immediate response to the lawsuit was to issue a statement expressing his disappointment with the litigation.
“As most Alaskans realize, and as stated by the Legislature’s own financial advisor, our state is in the midst of the gravest financial crisis in our history,” Walker said.
“We are in a $3.2 billion deficit now.
“It is truly unfortunate that our Legislature failed to pass a sustainable fiscal plan, like the one we submitted this past year, to protect and grow the permanent fund dividend program,” Walker said. “Instead, this continued lack of action will result in the elimination of the PFD program in just a few years.”
Walker noted that with his veto the PFD is still close to the historical average paid to every eligible Alaskan since 1982. The veto was set at a level that could be sustained as part of a larger fiscal solution – to ensure a PFD program continues for generations to come,” he said. “The amount that was vetoed remains in the Permanent Fund reserve/savings account for future distributions.”
Walker’s supporters include former Gov. Steve Cowper, who was in office from 1986 to 1990, including the time of the 1989 Exxon Valdez oil spill disaster.
During a talk at the University of Alaska Fairbanks on Sept. 17, Cowper said “Bill Walker is the best guy you could get for this job” and that he backed Walker 100 percent on his decision to cut the amount of Permanent Fund earnings money in the PFD checks.
“The real problem here is we will lose the state government if we don’t use permanent fund money to support it,” Cowper said. “You have to use the money. That’s the only thing that’s going to save Alaska’s public sector.
“This is a full-fledged emergency,” he said. “The Legislature is playing with fire. If you end up without an effective government, who is going to take charge?” he asked.
Cowper told the crowd of about 100, most of whom were residents when he was governor, that when he was a legislator, in the mid-1970s, “they were there for the good of the state, not for their own parties or to raise money for future elections. It was a pleasure to be there with them,” he said.
With the Democratic majority in the Legislature back then, there were so few Republicans that they became friends, and every one was taken seriously, he said. “We came in and discovered we did not have any staff or secretaries. We had to read all the bills ourselves. Everyone did everything themselves, and it made quite a difference,” he said.
The Alaska Democratic Party meanwhile came out against the governor’s decision, with a statement saying that the state statute (AS 37.13.145(b) requires the Alaska Permanent Fund Corp. to transfer 50 percent of the income available for distribution from the earnings reserve account to the dividend fund.
“The law is clear,” said Casey Steinau, party chair. “The governor does not have the authority to single-handedly override an existing statute.”
While Walker chose to cut in half every PFD, the Republican led majority in the Senate subsequently decided not to overturn Walker’s decision by refusing to allow a vote to override Walker’s veto, Steinau said.
“We must fix the oil subsidies and put an end to the massive giveaways to the oil industry,” Steinau said. “The Permanent Fund needs to be the very last option we look at.
“Right now, the governor and Republican-led Legislature are asking more from a child worried about where their next meal is coming from than nonresidents working in Alaska,” she said. “This cut only serves to harm our economy as well as Alaska families for whom PFD payments are a very significant source of income.”
Alaska Department of Labor statistics show that the percentage of nonresidents working in the oil and gas sector has grown over the last decade to 35 percent in 2014. Overall, Alaska’s nonresident hire rate has reached 20.8 percent, with nonresidents taking home $2.6 billion in wages.”
Since Alaska has no state income tax, nonresident workers pay no tax on income earned in Alaska, but do pay it in the states where they live.
