Governor Dunleavy proposes amendment to protect PFD

On January 23, Governor Mike Dunleavy proposed a constitutional amendment designed to permanently protect the Permanent Fund Dividend (PFD) by ensuring 50% of the annual fund draw is paid out to residents. The amendment seeks to constitutionally mandate the PFD, dividing the annual draw equally between dividends and state services without requiring annual legislative appropriations.

“Half the annual draw from the permanent fund will be used for the PFD, the other half for essential state services like public safety, education, and transportation infrastructure,” the governor said in a social media post.

In addition to constitutionalizing the PFD, key components of the proposed 2026 constitutional amendments include allocating 50% of the total annual draw from the Alaska Permanent Fund for dividends, with the remaining 50% available for government operations; and formalizing the structure of the Alaska Permanent Fund, including the Earnings Reserve Account, and ensuring at least 25% of state mineral revenue continues to be deposited into the fund.

The amendment would require a vote of the people for approval.

There currently is no constitutional guarantee for the PFD, despite previous proposals to amend the constitution to guarantee payments, the Alaska Legislature has not passed such a measure, leaving the dividend vulnerable to annual budget disputes. The Earnings Reserve Account, which funds the dividend, is subject to appropriation by a majority vote of the Legislature, and is often hotly contested during budget talks in the legislative sessions.

In 1968, oil was discovered on the North Slope of Alaska. It was a huge find and when the state held the 1969 North Slope oil and gas lease sale a year later, it brought in $900 million in revenue, and the young state was suddenly rich. In 1976, realizing that Alaska’s new oil wealth would not last forever, residents created the Alaska Permanent Fund to save a portion of the oil wealth coming to the state of Alaska. Four years later, the Alaska Legislature created the Alaska Permanent Fund Corporation to prudently manage the Fund.

The Permanent Fund dividend was created in 1982 by the Alaska Legislature through the adoption of statutes. The two institutions are fundamentally different--the Permanent Fund is a public savings vehicle, while the Permanent Fund Dividend is per-capita universal direct distribution.

The statutory formula in place since the 1980s had historically taken 21% of the Permanent Fund’s average net income over the previous five-year period, divided that in half, subtracted expenses, and then divided the remainder by the number of eligible Alaskans to determine each person’s dividend amount.

While frequently paid out since 1982, the PFD amount is not fixed and varies based on investment performance, oil revenues, and is legally a legislative appropriation rather than a guaranteed, constitutionally protected payment.

In 2016, the PFD moved away from the statutory formula after then-Governor Bill Walker vetoed about half of the expected dividend amount, which then led to a lawsuit regarding the constitutionality of that veto. The Alaska Supreme Court ultimately ruled that the governor’s veto was constitutional.

In 2017, in the case of Wielechowski v. State of Alaska, the Alaska Supreme Court ruled that the Alaska Constitution does not currently allow the Legislature to set up a system in which Permanent Fund dividends are paid in future years automatically, and the dividend must compete for annual funding from the Legislature, making it subject to political negotiation, potential cuts, or non-payment.

“Absent another constitutional amendment, the Permanent Fund dividend program must compete for annual legislative funding just as other state programs,” the ruling stated.

In December, when Governor Dunleavy submitted his proposed budget, he called for a PFD payout of $3,650 for each Alaskan resident, which, if passed, would make it the largest PFD check in the state’s history.

The governor urged residents to support the amendment and take action. “Urge your legislators to place this important amendment before voters this fall.”

If passed, the changes would take effect for the fiscal year ending June 30, 2026.