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Gov. Walker's cut to the Permanent Fund dividend is a terrible idea

  • Author: Rep. Wes Keller
    | Opinion
  • Updated: July 3, 2016
  • Published July 3, 2016

The biggest amount vetoed in the Alaska budget by Gov. Bill Walker does absolutely nothing to address our fiscal crisis. The money vetoed punishes Alaskans but does not add one penny to available revenue.

The vetoed money is not available for the governor to spend. It will simply further fatten the already obese Earning Reserves Account to be reappropriated (or not) by the Legislature at some future date as larger PFDs. Perhaps the veto is meant to suggest what the Legislature should do, but it is only that — a suggestion —  that punishes Alaskans for some unexplained reason. If economists are correct, decreasing the PFD is the worst thing we can do to our economy right now. Most people agree they spend their money better than government bureaucrats.

The unexpected oil price drop highlighted our huge challenge: Alaska has an embarrassing overspending problem. The appropriation for Permanent Fund dividends is not part of that spending problem. State government spends $15,470 per capita — the highest spending rate in the nation. The veto pen could have been used to actually cut state spending, but instead it has been used to defer payment on debt and promised dividends.

The Legislature, unlike any other state, has never had to cope with passing broad-based tax laws as part of our fiscal equation. The Alaska Constitution, Section 9.15, allows a huge amount of natural resources money to flow directly into the general fund. ($80 billion-plus so far and counting). We are finding the culture of overspending from this money very difficult to reform.

Those closest to the spending (at the public trough) are tenaciously protecting the source. The geographically isolated budget process is heavily influenced by spending advocates who have the easiest access to Juneau. The healthy tension related to tax legislation (typical in other states) is missing. The legislative power to spend has not been tempered by the legislative liability to tax. The constitutionally established 'tax' on the people's commonly owned natural resources (not typically called a 'tax') has become all but forgotten until now when it is going away.

"Restructuring the Permanent Fund," "Protecting the Permanent Fund," "Capping the Permanent Fund" are all code for taking Permanent Fund investment returns and placing them directly into the general fund (the 'tax on common property'). The coveted Permanent Fund Earning Reserves Account has been allowed to fatten to about $9 billion that could have been, or could become, bigger PFDs.

Simply 'taking' that money before it is personal property is not an option without a vote of the people who own it. It is not the right time to add any tax burden to Alaskans, but especially 'taxes' that have not been clearly understood or specified in the Constitution or state law.

It is the right time to make the cuts necessary to balance the budget while we have some transition money available in the Constitutional Budget Reserve. The veto power would be helpful, but only vetoes of spending, not an obscure reassignment of savings.

I am still trying to process the governor's recent comment the veto somehow allows him to be the one to blame, thereby allowing the Legislature to support his proposed revenue bills in the upcoming special session.

It seems to me to reveal an incredibly low view of legislators. Does this not imply that we make our decisions based on fear of blame rather than on the values and principles that got us elected? I can only speak for myself, but I voted for the PFD appropriation because it was the right thing to do.

I highly value the need to pay dividends to the owners of the investment capital (Alaskans) as promised. Frankly, based on the amount available in the Earnings Reserve Account, the amount prescribed by law for the PFD size is too low.

Rep. Wes Keller represents the Mat-Su area. 

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