Permanent fund should be protected
Missing in the town hall presentations by the director from governor’s office and our local legislator was equal time for alternative ways to match programs with revenues. Many economic experts oppose the idea of taking PFDs as bad for the economy. The first dividend was $1,000. This year that has the purchasing power which $400 did in 1982. This month, the Permanent Fund Board has told Alaskans that the Fund will be reduced by half in 20 years because the legislature has stopped inflation proofing. The investment officials also said that the proposed POMV (percent of market value) would take too much and also cause the Fund to lose.
Obvious alternatives to raise revenue and cut the budget:
1) Increase royalties on oil and eliminate subsidies.
2) Increase royalties on all public resources like mining and fisheries.
3) Collect income and fuel taxes and eliminate state programs that serve well connected interests: The gas line and Alaska housing corporations, and AIDEA are examples which hold billions of state dollars.
4) Consolidate state agencies by eliminating DEC and shifting their responsibilities to ADFG. Dep’t of Commerce could take in the power authority and other AIDEA divisions.
5) Slice benefits for high-tier retired legislators and state employees.
6) Put more money to work in the permanent fund by putting in half of all new revenue including what is taken temporarily from dividends. This can soon increase earnings to pay higher dividends, inflation proof and support important programs.
The Permanent Fund has been diminished by legislature which has not followed the law for inflation proofing. The 2017 Dividend has been reduced by more than half; it should have been $2,350 not $1,100. In the last two years the Homer/Anchor Point population lost more than $25 million from dividend reductions.
The idea that changes to the Alaska Permanent Fund management and uses should come about only by a vote of the people is being lost. Accordingly I have submitted the following draft Resolution for a ballot initiative to the Permanent Fund Corporation and to the Lieutenant Governor’s office:
“Be it enacted by the people of Alaska this resolution confirming that the people support the historic method in law since 1992 for ‘Distribution of Income’ from Permanent Fund Earnings as required by Alaska Statute 37.13.145 which states:
(b) At the end of each fiscal year, the (PF) corporation shall transfer from the earnings reserve account to the dividend fund established under AS 43.23.045, 50 per cent of the income available for distribution under AS 37.13.140.
(c) After the transfer under (b) of this section the corporation shall transfer from the earnings reserve account an amount sufficient to offset the effect of inflation on the principal of the fund during the fiscal year.”
I hope a simple measure presented to voters as an advisory initiative will get even more support than the 1999 vote which went 83 percent in favor of keeping the Permanent Fund safe. This is not the time to let this set of elected officials monkey with a Fund which has been working well. Their two worst ideas are capping dividends and changing “shall” to “may,” an amendment offered in the House Finance Committee, in regards to inflation proofing.
The pressure on fund management grows with each legislative session. The Fund annual meeting was told that the attempts to try and achieve fast money to satisfy the legislature with riskier investments, would mean trading the present successful investment methods for: Blackjack!
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