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Dividend is vital to protection of Alaska's Permanent Fund

  • Author: Dr. Jack Hickel
    | Opinion
    , Jon Faulkner
    | Opinion
  • Updated: February 13, 2017
  • Published February 11, 2017

Jay Hammond, shown near his Lake Clark home June 5, 1985, was a bush pilot and hunting guide who served two terms as Alaska’s governor and helped create the Alaska Permanent Fund. Hammond died in 2005 at the age of 83. (Erik Hill / Anchorage Daily News)

The mission of the Permanent Fund Defenders  is threefold:

First, to educate people about the history and purpose of Alaska's Permanent Fund and the Permanent Fund dividend (PFD) program;

Second, to actively defend what we regard as its primary purpose;

Third, to support you in making the right decision on behalf of Alaskans at every economic level regarding the PFD and Fund.

Several of us worked with the late Gov. Jay Hammond to create the PFD and the fund and can attest to what we believe was his — and the people's — intent at the time. We also detail here the many diverse and compelling points in defense of maintaining inflation-proofing the Permanent Fund and the full dividend program.

Hammond warned: "Of one thing I'm sure … as go dividends, so goes the Permanent Fund. Cap, reduce, or eliminate the PFD and the fund will follow suit."

This is the wisdom of a man who understood the meaning of "sustainability" long before many of us were born. Hammond understood the ease with which public money disappears and how impossible inflated budgets are to rein in. He understood that oil wealth belongs to the people in common, for all generations to come, and a reasonable share should be directly distributed to residents. He believed, as we do, that the dividend is not discretionary, subject to veto or re-appropriation. It is a right deserving of constitutional protection. When the Legislature considers other revenue options, it must take the dividend off the table.

The Permanent Fund belongs to the people of Alaska according to the Alaska Constitution (Article 8). The PFD is the citizens' equal share of resource wealth, not a form of welfare. Alaskans possess the right to consent to all changes to how those earnings are used and managed. We are aware that inflation-proofing the fund is essential to protecting the fund's value for future shareholders. Plans to do away with inflation-proofing the Permanent Fund are just another way to take money out of Alaskans' pockets and move it into government's pocket, and the value of the fund will erode quickly.

From a public policy standpoint, taking any part of the dividend from Alaskans has disproportionately negative consequences when compared to other options. It affects people at every economic level but especially those who need it the most. UAA's ISER study concluded that reducing our dividend by $1,000 pushes between 12,000 and 25,000 people below the poverty level.

The PFD is an also efficient means of distributing annual shares of income. When ISER compared reducing the number of state workers with reducing capital spending, and broad-based spending cuts, they concluded that cutting the PFD should be the last option used to help balance the budget because it has the largest negative impact on income and jobs.

Spending the people's PFD money any other way benefits too few at the expense of the many. A full dividend, spent by Alaskans, drives our economy in far more efficient ways than if it's spent in the public sector. Dividends rotate through our local economies three to four times, almost twice that of public sector spending, keeping our local economies strong. Therefore, we support current legislation to restore the full PFD to Alaskans and ease this recession as soon as possible.

The best way to protect the Permanent Fund is to vest Alaskans with a purpose to defend it — a dividend. A dividend linked to the fund's performance keeps government accountable to the people. The dividend should not be capped but should rise and fall with the fortunes of the fund. This makes Alaskans the watchdogs that guard the fund from mismanagement and overspending by government.

Alaska's Permanent Fund and PFD program have become beacons of hope to nations around the world. We call upon you to protect this example, praised worldwide as a model for saving wealth, lifting people from poverty and protecting the citizens' wealth from government plundering.

The Permanent Fund system has worked well for almost 40 years through economic swings and changes of administrations.  Alaskans are keenly aware of the present challenges we face of declining oil production, relatively low prices, downsizing government and diversifying our income sources. But we also know that these challenges are solvable without "restructuring" the fund and PFD. The long-term solution, we all agree, is to pass a constitutional amendment protecting the existing PFD program and formula. Now is the time to defend our Alaska constitutional rights.

Please join us in pledging to stop the attacks on the PFD with a constitutional guarantee. Contact your legislators now to stop the raid on your Permanent Fund and PFD. Keep the people's ownership stake in the fund strong and keep the Permanent Fund permanent.

Dr. Jack Hickel  is a family physician who works with the Southcentral Foundation. Jon Faulkner is the owner of Land's End Resort in Homer. Other members of Permanent Fund Defenders contributing to this commentary are Rick Halford, former president of the Alaska State Senate, former state Sen. Clem Tillion of Halibut Cove and Jim Crawford of Anchorage. Permanent Fund Defenders are on Facebook and at www.pfdak.com.

The views expressed here are the writer's and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@alaskadispatch.com. Send submissions shorter than 200 words to letters@alaskadispatch.com

 

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