Alaska's politicians, dragging out the flag, mom and apple pie, are stumbling all over themselves trying to save our Permanent Fund dividends from, well, Alaska's politicians.
Democratic Rep. Chris Tuck and Republicrat Gabrielle LeDoux are the latest publicly to join the festivities, opining in an Alaska Dispatch News op-ed that Alaskans, by golly, have a right to the annual payout; that it should be enshrined in the Alaska Constitution.
What a lousy idea. Or is it?
Count me among the reviled buzz-killers who believed — and still believe — the Legislature's codifying the annual payout in 1980 was a grievous policy error; that handing out free money is a mistake. It eventually would become the tail wagging the dog, we thought. And it has. (Yes, yes, and I revel in cashing mine in all my conflicted, hypocritical glory.)
Then-Gov. Jay Hammond believed, all too correctly it turns out, Alaskans' ferociously would protect the state's oil wealth account if they got a piece of the action. The annual payment quickly became the third-rail of Alaska politics, with a heartbeat of its own.
[Yes, put the dividend in the Alaska Constitution]
As many suspected, the dividends — not included in the voter-approved constitutional amendment that formed the Permanent Fund — over the years have evolved into an ersatz entitlement. Last year, an apparently politically suicidal Gov. Bill Walker vetoed more than half the dividend. Not to be outdone, the Legislature this year capped it at $1,100, far less than half of what it would have been. Ostensibly, the money eventually will help pay for government, now running $2.5 billion or so in the red. For now, it remains in the Permanent Fund Earnings Reserve.
Alaskans who believe the payouts are their God-given, guaranteed share of Alaska's oil wealth are madder than wet hornets. The cuts are a regressive tax, they say, hurting the poor. Cut government more, they say, do not steal from us. Politicos will just waste the money anyway, they say.
They may be right, but the problem with constitutionally enshrining the dividend to mollify the outraged is that it would become a legitimate governmental albatross that must — must — be paid. No exception. Even if there is no money for necessary, legitimate government functions such as law enforcement or education or transportation; even if we have to turn out the lights as a state.
There has been a dividend formula in place since the dividend was adopted in law and it has worked well over the decades, with the annual amount increasing and falling with the fund's performance. The wrinkle last year came when Walker in June vetoed about $696 million of the $1.4 billion the Permanent Fund Corp. trustees transferred to the Earnings Reserve Account for PFDs.
There were the requisite legal fireworks and political squealing, of course, when Walker sidelined the dough. Those backing him claimed the transfer actually was a legislative appropriation subject to veto. Those opposed said it was a simple transfer not subject to the governor's veto pen. The Alaska Supreme Court sided with Walker.
All that is bothersome.
The fund's corpus already is protected by the constitution. If there is to be a dividend — and that should be decided by fund managers and the fund's performance, just as dividends are decided by corporations everywhere — you have to wonder whether politicians should get the last word? They will, after all, always opt for the easy way out of a fiscal mess, and making budgets fit revenues is mean, nasty work.
The question is important and necessary because if the governor and lawmakers can take half, they can take it all. What are the takings' economic effects? Alaska is in a recession and peeling hundreds of millions from the private economy seems somehow counter-intuitive.
The University of Alaska Institute of Social and Economic Research, in a report titled "Short-run economic impacts of Alaska fiscal options," last year weighed potential short-run economic effects of options ranging from cutting the state's work force, to taxes, to reducing the PFD as the state tries to raise revenues.
It concluded dividend cuts have "the greatest short-run effects on income" and cost the poorest Alaskans the most in disposable income. What would do the least harm? Using fund earnings for government, researchers concluded.
Derailing dividends for state spending, it could be argued, prioritizes government over individuals and their economic well-being, something nobody should support. The squishy part of me, the part that actually likes puppies and kids, wonders whether politicians should somehow be barred from messing with dividends on a whim or a sniff of red ink.
The good news is that if the Tucks and LeDouxes have their way, any PFD enshrinement eventually would require a vote of Alaskans, and the question would be answered, one way or another.
In the meantime, I'm not so sure anymore.
Paul Jenkins is editor of the AnchorageDailyPlanet.com, a division of Porcaro Communications.
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.