When we talk about statewide fiscal policy, especially proposals involving a sales tax or changes to the Permanent Fund Dividend, we need to start with an uncomfortable but essential truth. Alaska districts are not impacted equally. A policy that looks balanced on paper can land very differently depending on where you live, how much you earn, and how much of your income goes toward basic necessities.

House District 30 and House District 11 illustrate that reality clearly.

District 30, which includes Houston, Big Lake, and surrounding Mat Su communities, is more rural and lower income. Median household income sits well below the state average. Poverty rates are higher, and child poverty is significantly higher than in most urban districts. Families in District 30 spend a larger share of their income on essentials like groceries, fuel, utilities, and transportation. Those costs are unavoidable, especially in winter, and they leave little room for flexibility when prices rise.

District 11, an urban Anchorage district, looks very different. Household incomes are substantially higher, poverty rates are lower, and residents generally have more discretionary income. Basic necessities consume a smaller share of total household budgets, and families are better positioned to absorb price increases when taxes or fees go up.

That distinction matters because sales taxes are consumption based. They do not scale with income. A flat sales tax takes a larger percentage of income from a family earning seventy thousand dollars than from one earning one hundred twenty thousand dollars, even though the tax rate is the same. That is why sales taxes are widely recognized as regressive. They hit hardest where incomes are lower and necessities make up most of the household budget.

In District 30, a sales tax shows up immediately in grocery bills, heating fuel, transportation, and day to day living costs. In District 11, it is more often a minor inconvenience than a huge financial strain.

This is where the Permanent Fund Dividend becomes central to the discussion. The dividend represents a much larger share of household income in District 30 than it does in District 11. For many families, it is not disposable money. It is what helps pay for winter fuel, vehicle repairs, school supplies, or simply keeps household finances stable. In effect, the dividend helps offset the regressive nature of consumption taxes.

In higher income districts like 11, the dividend is still valued, but it makes up a much smaller portion of annual income and does not play the same stabilizing role. Cutting or capping the dividend while increasing reliance on sales taxes compounds the burden on lower income and rural districts, while softening the impact on wealthier ones.

This imbalance is compounded by how the dividend itself is now decided. Governor Jay Hammond’s militant ring theory was built on the idea that Alaskans, as direct beneficiaries, would act as guardians of the Permanent Fund. That idea worked when it came to protecting the Fund itself. The Alaska Permanent Fund has grown into one of the largest sovereign wealth funds in the world, now exceeding $85 billion.

But protecting the Fund is not the same as protecting the dividend.

Today, the dividend is set through annual political negotiations rather than a predictable formula. Alaskans should be paid first, which would create a pseudo spending cap for the legislature. Instead, they apply, wait, and eventually receive whatever pittance remains after lawmakers decide how to divide earnings between dividends, government operations, inflation proofing, and other priorities. In 2025, recipients did not learn the full amount until September, long after much of their dividend had already been committed elsewhere, mostly to the BSA increase.

That lack of predictability hits districts like 30 hardest. When families rely on the dividend as a financial buffer, uncertainty matters. It is difficult to plan for winter heating costs or major repairs when the dividend amount is unknown until late in the year, or when it comes in far lower than expected.

Research from the University of Alaska Anchorage shows that the Permanent Fund Dividend has reduced poverty by 20 to 40 percent over time, with particularly strong effects for children, elders, and rural Alaska Native communities. Those benefits are not abstract. They are felt most strongly in districts where incomes are lower and costs are higher.

Think about it this way. A small village or rural community in District 30 may have a single state road winding through it. It does not require or use the scale of infrastructure spending seen in urban Anchorage, where dozens of state roads need constant plowing and repair. Yet dividend dollars taken equally from families in both communities are routinely redirected to support the larger urban infrastructure systems, or even school districts. The legislature’s actions suggest it knows better how to spend money removed from the dividend, or even sales tax, but the outcome is clearly disproportionate. That is where the dividend versus income disparity becomes most visible. Even well-intentioned additions to the budget, such as $12 million for mental health programs, are far more likely to land and concentrate their impact in Anchorage than in rural districts.

The policy question facing the Legislature is not whether Alaska needs revenue. We all know it does. No, the real question is how that revenue is raised and who carries the burden. A one size fits all sales tax, combined with a reduced or unpredictable dividend, assumes all households are starting from the same place. They are not.

If lawmakers are serious about tax fairness and fiscal responsibility, these differences cannot be ignored. Any proposal for new taxes must be paired with an honest discussion about the Permanent Fund Dividend and its disproportionate importance to working families, rural communities, and lower income districts like House District 30.

Ignoring those realities does not make the system fair. It just makes it easier for the burden to fall on the people least able to carry it. It is time we fix that.

Originally published on Substack: https://kevinjmccabe.substack.com/p/geographic-effects-of-the-pfd-and