OPINION: How to invest Alaska’s budget surplus

Once again, this year Alaska is in the enviable position of being able to fund public services with a combination of sustainable earnings from the Permanent Fund and revenue from oil production — even though individual Alaskans don’t pay a cent in state income or sales tax. Alaska is the only state in the U.S. to have such wealth, and it gives us the opportunity to plan and invest for the long term.

But wait, you might say — I thought the state had a budget deficit? Only if you bake into our budget payment of a massive Permanent Fund dividend based on a formula that hasn’t been used for nearly a decade. Let’s be honest with ourselves: The 1982 PFD formula is an anachronism. Dividends have not been paid based on that antiquated formula since 2015. Since the formula is wildly unaffordable and oil production is four times lower compared to 1982, the Legislature is highly unlikely to use the formula, unless we engage in a reckless spending spree by raiding the Permanent Fund itself.

While payment of PFDs based on a 1982 formula is no longer practical, we can afford to fund PFDs roughly in line with original legislative intent of roughly $1,000, which is similar to the historic average of dividends over the last four decades.

So we face a question of balance and priorities. What is more important, good schools or cash payments to individuals? A strong police force or a check that might allow you to buy a security camera doorbell? Well-maintained roads or a couple of thousand bucks toward the kind of high-clearance vehicle that has become necessary to navigate Anchorage’s snowbound, potholed streets?

After a decade of paying much-larger-than-average dividends, a decade of declining schools, decaying infrastructure, and consistent out-migration, it seems fairly obvious that Universal Basic Income through PFDs cannot compensate for a failure to fund basic services. Fortunately, because of Alaska’s Permanent Fund endowment and resource wealth, we can easily afford funding a civilized level of public services, and pay a reasonable but not massive dividend.

Here’s how the math works: At current oil prices, we can fund all existing state services, reverse the last six years of cuts to education, pay a $1,000 PFD (the historic average, taking into account inflation), and have an approximately $550 million surplus. Consider how affordable adequate education funding is: Restoring education funding costs $265 million, approximately one-fourth the cost of a $1,000 dividend. So we can fully fund education, pay a PFD consistent with the historic average and have a budget surplus.

Rep. Zack Fields, D-Anchorage, represents District 20 in the Alaska House of Representatives. He was elected in 2018.

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