All seven members of the Alaska Senate’s powerful finance committee on Monday proposed rewriting the payment formula for the annual Permanent Fund dividend, renewing the Senate’s effort to replace an obsolete state law that hasn’t been followed since 2015.

If signed into law, Senate Bill 109 would split the annual transfer from the Alaska Permanent Fund to the state treasury. Seventy-five percent of that transfer would be reserved for state services, and the remaining quarter would be used for dividends.

This year, that’s worth about $1,420 per recipient, according to estimates by the Legislative Finance Division.

Sen. Lyman Hoffman, D-Bethel and co-chair of the Senate Finance Committee, said he didn’t bring the proposal to all 14 members of the Senate’s majority caucus before introducing it, but he already has the support of all seven of the committee’s members, including two members who are part of the Senate’s Republican minority.

Hoffman said the bill could have been sponsored by the committee, but instead, all seven senators put their names as sponsors and co-sponsors.

“I think it makes a bigger statement to the people of Alaska and the House and Senate that … this is something that should be on the table for discussion,” Hoffman said.

The effort to rewrite the formula faces long odds. Members of the Alaska Senate have supported the “75-25 split” proposal since at least 2017, the year before lawmakers enacted the annual Permanent Fund transfer.

At that time, legislators said the dividend formula would be addressed at a later date, but no new formula has garnered sufficient support to become law, and in the meantime, the dividend has been set by fiat each year, becoming the Capitol’s biggest annual issue.

For the past two years, the dividend amount has been based on the 75-25 split, even though the new formula has failed to become law. The 2024 dividend was boosted by an additional energy relief payment.

This year, barring tax increases, there isn’t expected to be enough state revenue to pay for both a 75-25 dividend and the K-12 public school funding increase advancing through the Alaska House.

Estimates by the Legislative Finance Division, which performs fiscal analysis on behalf of the Legislature, show a deficit of near $500 million in the next fiscal year with a 75-25 dividend and the proposed public-school funding increase.

Some members of the Alaska House of Representatives have suggested a $1,000 Permanent Fund dividend — instead of the 75-25 split — would be needed to balance the state’s books if the proposed K-12 funding bill becomes law.

But that would also require the Legislature and Gov. Mike Dunleavy to approve a rewrite of the state’s corporate income tax law to cover Hilcorp, a privately held oil company.

In the coming weeks, it’s expected that one or more legislators will introduce a bill that would raise revenue by reducing or eliminating a per-barrel oil tax credit that’s part of the state oil tax system.

That change is expected to raise more than $400 million annually, and coupled with the change to corporate taxes — worth an estimated $140 million annually — could be enough to pay for both the 75-25 dividend and the K-12 funding bill.

Sen. Jesse Kiehl, D-Juneau and a cosponsor of the new formula bill, said that without action, he believes legislators will continue to cut the Permanent Fund dividend in order to meet rising costs.

“We need something that we can afford and that Alaskans can count on, so that the argument about how much the (PFD) check should be this year doesn’t drive the end of every legislative session,” he said. “And to be quite frank, so we don’t end up at zero, because that’s the path.”

• James Brooks is a longtime Alaska reporter, having previously worked at the Anchorage Daily News, Juneau Empire, Kodiak Mirror and Fairbanks Daily News-Miner. This article originally appeared online at alaskabeacon.com. Alaska Beacon, an affiliate of States Newsroom, is an independent, nonpartisan news organization focused on connecting Alaskans to their state government.