The Alaska Permanent Fund was created in 1976.

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The 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:
At 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.

Crude oil started flowing from the big oil field at Prudhoe Bay, Alaska, and down through the newly completed Trans Alaska Oil Pipeline in 1977.
The 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.

(The 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.
Since 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.
The 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.
Using 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.
I (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).

I have 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.
This 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.
There 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 "Standard Deduction".
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).
I 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 debt.

                Note: The "Reconsideration Account" does not exist. It is a proposal for this tax free idea.
And 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 o
n May 16, 2016
Added: May 24, 25, 30, 2016