I was pleasantly surprised, on Sunday to see Paul Jenkins and Shannyn Moore actually agreeing on something. The percent of market value plan for the Alaska Permanent Fund, including a cap on dividend payments, is a sensible part of the solution to our state's financial woes. Regretfully, neither Jenkins, Moore or Gov. Bill Walker have taken this idea far enough. The dividend should be capped at zero dollars.
Please don't throw the paper down in disgust until I have explained my reasoning. I really didn't want to be the first to say this, but it appears our only other option is some kind of statewide tax.
As a 37-year-old lifelong Alaskan I have received a check every year since 1982. Including this year, the total comes to nearly $40,000. I understand the importance of the dividend as an economic driver. From 1996 to 2006, I used that money to pay the winter utilities. Lately I've used it to buy toys. This year's check is going to help me start my own business. None of this changes the fact that if the current budget crises is not resolved, the damage to the state's bond rating will have economic repercussions that far outweigh any good the dividend can do.
There has been some talk of capping dividend checks at $1,000, but this is always accompanied by instituting an income or sales tax. The problem with taxes is that much of the revenue generated goes to enforcement of those taxes. How does it make sense to give ourselves a thousand bucks in October and ask for it back in April?
Certainly there are cuts to be made in state spending. I would start with the salary and benefit packages of our lawmakers and their staff. Grants to nonprofits may have to go by the wayside. Municipalities will probably have to carry more of their burden. All of these options put together would not equal the state's spending on dividend checks.
During the last legislative session(s), there was a giant ball of dust and not a dang thing getting done. We saw much wailing and gnashing of teeth, plus a squabble over a $200 million. The Republicans cried about "targeted cuts," while the Democrats wailed over "essential programs." Meanwhile, both sides punted on solving the underlying causes of our fiscal problems.
Make no mistake, I love getting that check in October, but I firmly believe the divided falls in the category of "nonessential" spending. No other program is more deserving of the label "entitlement." If a zero-dollar cap had been in effect this year it would have meant the Legislature could have left $1.33 billion more in the Constitutional Budget Reserve. That's a big chunk of change toward the gas line.
By appropriating 5 percent of the Permanent Fund balance, using a five-year rolling average, we could provide lawmakers with a concrete number they could plan for. This approach would provide some stability and predictability to our budget cycle. The price of oil would provide enough volatility that the Democrat and Republican crowds could still stage their petty squabbles..
As Alaskans, one of our watchwords is "sustainability." The POMV plan can provide the kind of sustainability we need to weather fluctuations in oil prices. Capping the dividend makes sense because a cap can be lifted at a later date. If oil prices rise or the gas line gets built we can start handing out free money again, but until then we need to tighten our belts.
If Alaskans can manage to pull together, and make a small sacrifice in the form of the dividend, we can achieve positive things. A good credit rating, self-reliance and our gas line dreams are all within our grasp.
To me, it comes down to one thing: I'd rather lose my dividend than pay taxes.
Tim Hale was born in Anchorage and raised on Prince William Sound. He currently lives in Palmer, works in construction and lives paycheck to paycheck.
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