Proposed bill suggests new way to send PFD money to state coffers

Bill could make decision part of online application

Alaskans who want to give their Permanent Fund Dividend money to the state could have an easier way to do so.

State Sen. David Wilson, R-Wasilla, spoke Monday morning during a Senate Finance Committee meeting about Senate Bill 92, which would allow people to choose to contribute $25 or more in PFD money to the state during the electronic application process.

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“If you want to donate to the general fund, that’s your choice, feel free to do so,” Wilson said. “If you choose to keep your PFD, that is also your choice. We just believe Senate Bill 92 is all about freedom to make decisions and not have the government make that decision for you.”

He said the bill was based on input from people around the state, including his constituents, who wanted to use the PFD to help fund state government due to the state budget crisis.

“We’ve heard from many, many Alaskans who are interested in donating all or a portion of their PFD to the general fund to help support government to help increase services,” Wilson said. “We’ve received plethora of testimony over the past few days. We’ve heard, ‘Take my PFD. I’m willing to receive reduced PFD.’”

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The bill generated questions from fellow senators, but no members of the general public spoke about the potential bill.

Sen. Bert Stedman, R-Sitka, asked if people facing garnishment would be able to give away their PFD to the state and bypass paying their obligations.

“When people apply for their permanent dividend, there is a priority order for which we pay out in, and garnishments are first,” said PFD Division Director Anne Weske. “So if they gave to the general fund, and the budget had a garnishment, all those funds get taken first. “

Stedman asked if that would keep “deadbeat dads” from throughout the state from slipping out of financial obligations.

Weske said it would.

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Sen. Peter Micciche, R-Soldotna, said he supports the idea behind the bill, but would like there to be a mechanism that makes choosing to send PFD money to the general fund a tax-free proposition for Alaskans.

“What this bill does is it allows them to do online what they can do today by receiving the check and giving it back,” Micciche said.

He said in the instance of a $3,000 PFD check with a 30 percent tax rate, it would cost $900 to participate.

“I think there are ways to do it because you never have control over the funds,” Micciche said. “I think it’s something we should think about. People will take advantage of this program if they don’t have to spend $900.”

Wilson said he had not found a way around the money being taxed and said it would be advisable for people to check with a tax professional before opting to donate PFD money.

Sen. Natasha von Imhof, R-Anchorage, committee co-chair, said the bill was not being passed from committee, and her office would be accepting amendments throughout the week while it was set aside for further reading.

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She said fluctuating dividend size and individual tax scenarios would make it extremely difficult to include specifications related to tax in the bill.

“To try to put something in the bill that covers any all situations, I think would potentially be nearly impossible,” Von Imhof said.

Micciche took the opportunity near the end of the meeting to clear up a common misconception about PFD money.

“We hear from people all over the state on these issues, and one of the things we hear is, if you don’t want your dividend just don’t apply for it, and it will go back to the state. Well, it doesn’t,” he said. “It gets divided by the remaining people that applied for the dividend, so that doesn’t work.”

• Contact reporter Ben Hohenstatt at (907)523-2243 or Follow him on Twitter at @BenHohenstatt.