The raging topic spreading across the state as the month of May kicked off was HB 209 filed by Rep. Zack Fields of Anchorage. His bill would change the PFD as we know it, and from what I can tell, Alaskans don’t just “not like” his bill; they pretty much hate it. What does HB 209 do? Three things:
Is “hate” too strong of a word? Rep Field’s HB 209
1) Only those who don’t file federal taxes or make $50,000 or less (combined $100,000 for married couple) would be eligible for the PFD. As you can guess, this proposal is going over like a lead balloon.
2) The PFD would be capped at $1000. Interesting side note: Rep. Fields and many – if not all – of his Majority colleagues supported inflation-proofing into perpetuity an unsustainable BSA increase of $1800 that NEA was requesting. The $1000 PFD he is suggesting for just some Alaskans, however, would not be inflation-proofed. Hmmm.
3) The legislature paying out the capped PFD to just some Alaskans would be 100% optional. The bill leaves it to the whim of the State House and Senate. Another big hmmm.
What do you think of this this proposed legislation? Does it conjure up any particular reaction and emotion for you? While you process your response, let me reassure you that this bill will not pass this session.
Changing the PFD check to a welfare check, to a program that rewards less productivity and reduced investment by individuals is not going to be welcomed with enough open arms to pass. This is not at all what Governor Hammond had in mind when the PFD was created.
Now having said that, when an idea gets floated, even if it’s initially rejected, if it sticks around over time, people get more comfortable with it. So we shouldn’t become complacent on this one. I can only imagine the fierce lawsuit that would ensue if a proposal like this were to become law, based on the 1982 Zobel v. William ruling by the US Supreme Court.
A threat more real than HB 209
More concerning to Alaskans than HB 209 passing anytime soon though is the lack of the adoption of a true fiscal plan to provide certainty to our private sector economy and the disappearance of the PFD altogether.
Because the state budget has been out of hand in previous decades at various points due to the lack of a meaningful spending cap, because the votes have been present for 10 years to pull funds from the PFD to pay for state government, and because oil prices are down and expected to stay down which has drastically reduced available revenue, the PFD is on life support at this point.
Giving credit where credit is due
I cannot ignore the fact that we have had some adults in the room this year. The Senate Finance Committee is dealing with the huge fiscal shortfall head on. They reduced the capital budget by about $100 million and the operating budget by $130 million.
At the same time, however, because revenue is limited due to low oil prices and the state savings account (the Constitutional Budget Reserve or CBR) is not built up enough to take a large draw, they’ve unfortunately also reduced the PFD from the 75/25 split at $1400 to a 86/14 split of $1000.
Can we learn from the mistakes of the past?
Had we had enough adults in the room over the decades to prevent spikes in spending when oil prices were high, we’d be in a lot better position. No use crying over spilled milk at this point but I hope we can learn from the mistakes of the past.
Will the dire state fiscal situation at hand, which is expected to be as bad, if not worse, in 2026, have the effect of whipping enough votes to get the pieces of a fiscal plan in place when the legislature reconvenes in January of 2026? I have been speaking about our hitting this point and the need for a fiscal plan for more than a decade. Let’s see if enough others get on board.
If we want a strong economy and want to be business friendly to ensure opportunities for Alaskans and our children and grandchildren, we will have to take steps to put our fiscal house in order. If we don’t, and the private sector knows our lack of spending discipline will repeatedly result in our chasing after them again and again to collect higher and new taxes, our economy will shrink and our family members will leave the state they once loved.
We have a short-term window of opportunity to turn the ship to prevent hitting an iceberg. The next couple of years will be critical in getting this uncomfortable work done.
