Brennan: Make your opinion known
By Tom Brennan |
Those holding strong opinions about the size of Alaska Permanent Fund dividends need to let people know.
Most importantly, they need to make their opinions known to Gov. Mike Dunleavy and the legislators representing their districts, both House and Senate. But share them as well with the media and general public.
These are transitional times in Alaska. The budget is tight, agencies are clamoring for more money and the pressure is on once again to dip into the Permanent Fund Earnings Reserve Account to meet state needs.
Going into Earnings Reserve again this year is all but certain. The Legislature took money from there for the first time last year. Much of state spending is funded by oil and gas taxes and royalties and the difference between current income and budget needs is made up by drawing down savings.
In the past, state government income has been supplemented by drawing down the Constitutional Budget Reserve Account, which was built with billions from past settlements of tax and royalty disputes won by the state from the oil industry. But these days the CBR is almost gone, down to a couple of billion the last we heard.
In 2018 the time finally arrived when the Earnings Reserve had to be tapped, both for state budget spending and for the dividend checks we all received. In 2018 the dividends were $1,600, which was less than the previously accepted formula would have offered. Because we got short-changed in the last few years, Dunleavy was talking earlier about making up for the short checks of the Bill Walker years with a whopping dividend of $3,157, almost double last year’s.
But reality has set in and the Legislature is now talking about a dividend of between $1,000 and $1,600, with the balance of available cash going for essential state spending. Going higher would mean either cutting the budget, which would impact state services and a variety of state-funded programs, or dipping deeper into the Earnings Reserve Account.
If you feel strongly about paying the largest possible dividend, that is what you need to convey to state leaders, both public opinion leaders and those elected to represent us. I don’t feel strongly either way. If the state writes us larger dividend checks, either state operations will be shorted or the dip into savings will be larger. I like getting the money but worry that if they go through the Earnings Reserve Account the way they did the Constitutional Budget Reserve the ERA might run dry too.
That isn’t likely to happen anytime soon since the CBR was funded with one-time settlements and the ERA gets contributions every year as earnings are spun off from the body of the Permanent Fund. In recent years those deposits have been on the order of $4 billion.
So, if my math is correct, the state could tap the ERA each year for a combination of $4 billion in budget needs and dividend checks — and the ERA would not be diminished. Putting half of that into dividends would mean checks for you and me of $2,700, about $500 below what the governor proposed.
Right now it looks like the dividend checks will be more like what we got last year, or less, with the rest going for what is arguably essential state spending.
If you don’t like that, sound off. If it’s OK by you, just grin and bear it.