Just after Alaska voters approved creation of the Permanent Fund in 1976, Anchorage attorney Joe Josephson, who was between stints in the Legislature, said the proponents of the fund had offered "mutually inconsistent concepts" about what it all meant.
Some claimed it would provide home and business loans to those who could not get cheap credit. Others said the fund would be a "safe endowment for future generations of Alaskans."
"Now the task is to decide just what kind of fund we want and what its guiding philosophy will be," Josephson, now 82, wrote in a 1976 newspaper column.
The task, which now falls to the likes of his son, Rep. Andy Josephson, D-Anchorage, will remain with us for as long as the fund lasts and representative government survives.
While the fund has operated for more than three decades as a dividend machine, with most of the rest of the earnings plowed back into the account, the oil price collapse means the state has no real choice but to use some of the money to keep the schools open and the roads plowed. Exactly how much is the question.
The most strident debate in the year to come will be about whether the state can afford to keep the dividend in its present form. It can do so only if we take a reprieve from reality and accept imaginary numbers.
The other day, ADN published a news story suggesting that Gov. Bill Walker's planned dividend reduction, one big element in restructuring state finances, would top $15,000 for a family of four in the next three years. Instead of $26,200 that might be generated under the current formula, the family of four would collect $10,876 under the Walker plan.
A few things about those numbers: They are based on economic projections that may not pan out. The figures will rise or fall based on political compromises. And most important of all — the real question facing Alaskans is not whether a family of four wants $26,200 in the next three years or $10,876.
Asked to make a decision based on the $15,000 number alone, we know how people will respond. We might as well ask those who bought losing Powerball tickets if they wanted to win $1.6 billion.
Unfortunately, the issue for Alaska is not simply whether the state should hand out less money every year at dividend time. It's also about whether the state will provide essential services and whether we will land in a steep recession with job losses, plunging home values and business shutdowns.
There are also implications for future generation of Alaskans and whether they will be able to count on the survival of the Permanent Fund as the best insurance policy in the nation against high state taxes. If we assume that future earnings and oil development will allow higher withdrawals today, we may take out far more than we should and erode the value of the fund over time. There is room to strike a balance between dividend cuts and tax increases.
Alaska is facing an economic transition that could be wrenching, but the state has financial resources to weather the storm.
What's difficult is that the complete evaporation of billions of dollars from the state economy is something that we have yet to grasp. We may never be able to do so because the numbers are so extreme. I can't comprehend what it means to spend $3.6 billion or $4 billion from savings in one year.
We have no problem picturing the potential reduction of $15,000 over three years, however. That's the number people will focus on. As this is about more than keeping or surrendering thousands of dollars in dividends, here are some more numbers that can be understood.
The state is withdrawing nearly $20,000 for a family of four from savings this year to fund government services. Put another way, the state would have to draw down nearly $60,000 from savings over the next three years for that family of four, a trend that can't continue.
Budget cuts, new taxes and the use of some Permanent Fund earnings may be the only way to preserve the dividend, albeit at a reduced level.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.