Alaska Legislature passed an amendment to the Alaska Constitution (to
create the Permanent Fund) and then the people voted on it and approved
it on November 2, 1976.The Permanent Fund Amendment in the Alaska Constitution (Article 9, Section 15) very basically (approximately) says:
least 25% of the oil royalties shall be deposited into a permanent
fund, and the principle shall be used only for income producing
investments and cannot be spent or otherwise touched.|
All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law.
oil started flowing from the big oil field at Prudhoe Bay, Alaska, and down
through the newly completed Trans Alaska Oil Pipeline in 1977.
oil traveled down the 800 mile pipeline to the port of Valdez where it
was loaded onto oil tanker ships. Over the years the State of Alaska has
collected billions of dollars from oil taxes and royalties. The size of
the state government has also grown. More than 90% of the State's
revenue has come from the flow of oil.
In 1980, 4 years after the creation of the Permanent Fund,
the Permanent Fund Dividend program was created.
purpose of this website is to try to get a new check-off box on the PF
Divided application form, so a person can voluntarily help fix Alaska's
severe budget crisis)
In the 1980s, the State of Alaska had so much oil wealth money, it was decided to hand out an annual dividend check to every Alaska citizen.
there was surplus money, it made sense to distribute some of the
surplus earnings of the Permanent Fund to the people, rather than just
plowing all of the earnings back into the Permanent Fund.
State of Alaska facing a serious and massive budget shortfall.
price of oil has gone up and down over the years, but from 2014 to 2015, the price of oil crashed
from $110 per barrel to
as low as $30 per barrel. And it looks like the oil price is going to
be way down for years.
This cut deeply into the revenue of the State of Alaska and has
resulted in a nearly $4 billion dollar deficit gap between state
revenues and expenditures.
Another factor is the natural rise and
decline of the Prudhoe Bay oilfield. The peak flow in the Trans Alaska
Oil Pipeline was 2.1 million barrels of oil per day in 1988. In
2016 the flow rate is only around 530,000 barrels per day.
In 2015, the Alaska state legislature
made some cuts to government spending, but not nearly enough to close
the budget gap. They had to dip into some savings accounts in order to
balance the budget. But those savings accounts will run dry in a few short years.
In 2016, the legislature is trying to make a few more cuts and is looking for ways to bring in more revenue.
the earnings of the $53 billion Permanent Fund would pretty much solve
the problem of having a sustainable match between revenues and
expenditures. However, this would ultimately result in diminishing the
amount of the annual Permanent Fund dividend checks that the people
have gotten accustomed to. The legislators are afraid that the PF
dividend recipients will get mad and vote them out of office.
Here is a revenue enhancing idea that won't make anyone mad.
(Randy Griffin) have written to all of the legislators (in 2015 and 2016) and suggested
that there be a check-off box on the PF dividend application form so
that a person can voluntarily
donate all or a portion of their PF dividend to the general fund of the
State of Alaska. This would be in harmony with the last sentence of the
Permanent Fund amendment to the Constitution that the people voted for
in 1976 (see above).
applied for and collected the Alaska permanent fund dividend many times over
the years. But in 2015, I decided that I wanted to do my little
part in helping to fill the giant state budget gap. I wanted to donate
my PF dividend to the general fund but there was no "General Fund"
check-off box on the Permanent Fund Dividend application website, and so
instead I went to the "Pick Click Give" link on the PFD application
where there is a list of hundreds of charities/organizations looking
for funds. I chose the University of Alaska - Fairbanks
because they get a lot of their money from the state and that was the
best way I could think of to lessen the state's financial burden. The
maximum "Pick Click Give" donation for 2015 was $2000, and so that is
what I selected on the application.
It turned out that in
October 2015 the PF dividend check that went to everybody was actually
$2072. And so the PFD division of the Department of Revenue mailed to
me a $72 PFD check. I did not cash or deposit this paper check.
Instead, I mailed it to the Department of Revenue along with a note
requesting that they deposit it into the state's general fund. I also
requested a receipt.
It does not do any good to just simply not apply for the PFD.
is because the money that a person would have received, simply stays in
the PFD account where it is distributed to this year's or next year's
PFD applicants. This money does not go to the State's general fund.
I had to pay taxes on the PFD that I donated.
is one problem that happened to me. In March 2016, I went to a paid tax
preparer to get my 2015 federal taxes done, and asked if there was any
way I could escape tax liability for at least the $72 that I donated
back to the state. She said no.
My 2015 wages were about
$51,000 and my adjusted gross income (including the $2072 PFD) was
about $53,000. Even with my property tax and PFD donations, I did not
have enough to "itemize" on my tax form, and so took the $6,300
As it turned out, applying for, and donating out my entire PF dividend cost me $512 in extra taxes. In other words, if I had not
applied for the 2015 PFD at all, I would be $512 richer than I am
today. I don't like that situation. I can't afford to be paying out
extra tax money just because I am trying to help the State get out of
its financial mess.
(For more tax details - click here.)
Tax free idea (more money stays in Alaska).
have an idea for how a citizen could voluntarily help out with fixing
the State's budget deficit with PFD money, without incurring a federal tax
- First of all, it should not be called a "donation" because that
implies that the "donator" had "possessed" the money and therefore the
IRS will want to tax it unless the taxpayer can "itemize" their
- There should be no
PFD check (or "warrant" as they call it) filled out and made payable to
an applicant who doesn't want the check. Even if the
applicant/donor doesn't cash the check and instead sends it back to the
State to be deposited into the general fund, the applicant will still
have to pay federal taxes on it.
- Surely, there should be a way for a citizen to "advise" the State
to transfer a chunk of money (an amount equal to a dividend) from one
account within the Alaska Department of Revenue to another account
within the Alaska Department of Revenue. It's like moving money from
one safe to another safe 3 feet away within the same room. Why should a
citizen hundreds of miles away have to be taxed for money that is moved
a few inches from one government cash drawer to another cash drawer
that is owned and operated by the exact same government?
- There should be allowed - 2 types of applicants who
wish to fill out the PFD application: The first type would be a person
who would like to obtain a Permanent Fund Dividend check. The 2nd type
of applicant would be a person who does not
want to obtain a Permanent Fund Dividend check at this time, but
instead wants to establish, for the record, that he is an Alaska
resident and that he would be eligible to obtain a PF dividend check if
he were to go ahead and request one by a certain deadline in September.
But both types of applicants would have to fill out the PFD application
form by March 31.
"Reconsideration Account" does not exist. It is a proposal for this tax
- This 2nd type of applicant (budget deficit observer citizen) would select a new type of check-box
on the PFD application form. This new check-box would say: "I have
filled out the residency/eligibility questions on this PFD form, but I
have decided that I do not want to claim, apply for, receive or possess
the Permanent Fund Dividend at this time. I do request that an amount
of money that is equal to the dividend amount (when it is determined in
September) be transferred from the PFD account (at the Department of
Revenue) to the Reconsideration Account
(at the Department of Revenue). In September, I can reexamine my
options. I understand that from September 10 to September 20, I can go
to the Reconsideration Account
web page and select the option to apply to receive a dividend check. I
understand as an alternative, I may also check the box restating that I
still do not want to apply for, claim or receive the dividend."
- The PFD application form
would explain a few more things about the Reconsideration Account web
page: Those applicants restating that they still do not want to apply
for or receive the dividend may cast an "advisory vote" as to what is
to happen to the money that they had requested (prior to March 31) be
transferred (in September) to the Reconsideration Account.
The 2 choices would be 1.) Send it back to the PFD account (at the
Department of Revenue); or 2.) Send it to the General Fund of the State
of Alaska (at the Department of Revenue).
finally, there would be a notice that if no options were selected at
the Reconsideration Account website by September 20 then all unclaimed
and undesignated money
would automatically be transferred to the General Fund. And so, if the
original "budget deficit observer" applicant (who had specifically
checked the box that he: "did not want to claim, apply for, receive or possess the dividend at this time") does not even come to the Reconsideration Account
website in September (in other words - takes no action), then I
believe there is no way that he would be subject to a federal tax on
the Permanent Fund dividend.
Click here for more about this tax free idea.
Is the Permanent Fund Dividend a welfare check? - click here.
Written by Randy Griffin
PO Box 73653, Fairbanks, Alaska, 99707
This website created on May 16, 2016
Added: May 24, 25, 30, 2016