Although across Alaska there was a lot of angst about Gov. Bill Walker's veto last year of half the amount appropriated for Permanent Fund dividends, it was not only a courageous political act, it made sense.
We need the PFD program to help ensure our elected representatives don't try to box us into a situation where we have no other choice but to spend the principal of our savings account. Without some broad-based vested interest in the ability of our savings account to pay dividends, it wouldn't be long before the Legislature would be proposing a constitutional amendment to allow them to spend the principal of the Permanent Fund.
But that doesn't mean that the dividend program should remain untouched. While we may need to limit the size of the dividend and use some of the earnings to fund critical state government functions, we also need to re-evaluate to whom we are paying dividends.
First, we should eliminate dividend eligibility for unemancipated minors. In 2016 a total of 176,668 eligible applicants younger than 18 years old received $180.5 million. These funds should be used to pay a portion of our K-12 school budget, one of Alaska's two largest general fund budget items. After all, why does it make sense to send money to children when the state is spending so much on their basic education? It doesn't. While not a perfect match, we should think of it as a user fee; children contributing to fund a portion of their education costs.
Second, we should limit eligibility to those adult Alaskans who are not absent from Alaska for more than 90 days, except for their bona fide continuous medical treatment, caring for a relative with a life-threatening illness or caring for a terminally ill relative. In 2016 this would have provided another $28.5 million toward closing the general fund budget gap. (This does not include the amount that was paid to children who were absent more than 90 days since under my first recommendation children would no longer be eligible).
If we are facing a budget shortfall, why are we sending money to individuals who are not spending their time here in Alaska? I realize these people will claim they are entitled just like other Alaskans, but that is not the issue. The issue is that dividends should be paid to adult residents who live here the vast majority of the year, not those who are absent from Alaska for long periods of time. But even if 90 days is too strict, if we only paid otherwise eligible adults who were not absent more than 180 days, we would still save at least another $10.2 million for critical state programs.
No public assistance recipients
Third, we should eliminate PFD eligibility for those individuals who are already getting public assistance. Like the children for whom we spend a lot of money for their education, those receiving other benefits from the Alaska Department of Health and Social Services, the other major general fund budget driver, should not be allowed to "double-dip." Those dividend funds that are currently going to public assistance recipients should instead be used to help fund their public assistance payments.
Like Gov. Walker's partial veto of the PFD appropriation in 2016, enacting these three changes would take enormous political courage, but they make sense. The question is, does the governor or anyone in the Legislature have the political courage to propose and push for these needed reforms?
Tom Williams of Juneau is a 40-year resident of Alaska. He's worked for aviation-related companies for the past 17 years, was director of two Department of Revenue divisions, including the Permanent Fund Dividend Division, and served on the staff of the Senate Finance and Legislative Budget and Audit committees.
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