Alaska’s Legislature has been overspending since the crash of oil prices in 2015. Annual appeals for a “fiscal plan” and “long-term fiscal planning” have had no effect. Last year, the Legislature failed to inflation- proof the Alaska Permanent Fund, effectively shrinking the Fund’s future value. The Alaska Permanent Fund Corporation’s leaders say a constitutional amendment may be necessary to protect the Permanent Fund.
A much simpler solution would be a statutory “fiscal compass” that would compel lawmakers to consider the economic rights of future generations in Alaska’s oil and Permanent Fund wealth.
Alaska’s Constitution states: “All government originates with the people ... and is instituted solely for the good of the people as a whole.”
The Constitution’s edict that state government acts “for the good of the people as a whole” plainly encompasses both current and future generations. Thus a Constitution-based statutory fiscal compass could be as simple as: “In fiscal affairs, state government must consider the good of both current and future generations.”
What would that mean? First, it would certainly require that the Permanent Fund be inflation-proofed every year. More broadly, it would require the Legislature to consider the intergenerational effects of a budget. Thus, funding for education, health care and infrastructure, for example, would have a higher priority than, say, a large PFD. And, of course, a statutory fiscal compass would require a Governor to consider the intergenerational equities of budget vetoes.
Alaska’s motto is “North to the future.” To keep it true for future generations, the State needs a Constitution- based statutory fiscal compass to facilitate equitable long-term fiscal planning.
— David Knapp
Anchorage
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