Crawford: A billion here, a billion there – Alaska Mental Health Trust and the University of Alaska endowment

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By Jim Crawford |

The Legislature continues to find new ways to spend our money. I continue to read audits which present a different reality on state assets and management.

State financials prove that hundreds of millions, and in some cases billions of dollars, are available to the Legislature by simple majority. Is it hypocritical to reduce the PFD calculation while allowing state agencies to add to their profits?

The Legislative leadership continues to ask: “Where is the money coming from if not from cutting the dividend?”

Some answers:

From reducing spending on the gas line and other non-essential expenditures.

From reorganizing state agencies, freeing spare billions to balance the budget.

From putting our billions in land and investments to work with a strategic plan that requires top performance from all of our assets.

The dividend is the last item to cut since it’s the most important to the private sector’s health and wellbeing in Alaska. In my last column, I discussed the reorganization of Alaska Housing Finance Corporation, Alaska Industrial Development and Export Authority and the Alaska Energy Authority. The combination is a natural since both AHFC and AIDEA are state-owned lenders and AEA’s management is already farmed out to AIDEA.

Among the three, assets, less liabilities, are $4.3 billion. Putting them on a diet with a transfer of $4 billion to the General Fund or the Permanent Fund is easy, efficient and makes fiscal sense. None of them use their excess capital to further their responsibilities in housing, business development or energy development.

Legislative majorities want you to believe the money is just not there. Wrong. The money to pay the full dividend is in the bank. The current financial statement for the Alaska Permanent Fund Corp. just topped $19 billion in its earnings reserves. That $19 billion was earned under the state statute that designated 50 percent of those earnings to pay the dividend (over a five year average of earnings) and 50 percent for General Fund expenditures. The money is only subject to 21 votes in the House and 11 in the Senate. Gov. Mike Dunleavy is in full support of paying the full dividend.

Today, we add the Alaska Mental Health Trust and the University of Alaska Foundation to the examination list. It’s not that we are heartless or unsympathetic to budget constraints, but as an Alaskan banker for 35 years, I read financial statements of the agencies and the departments for reality. This morning’s read shows:

Alaska Mental Health Trust:

Cash and investments: $686,476,000
Profit in FY 2018 $48,000,000

Value of land contributed by the state of Alaska: $1,030,000,000

The trust land, more than 1 million acres, is booked in its financials for $1 per acre, but valued professionally at a minimum $1,000 per acre. Should the Alaska Mental Health Trust dividend half of its annual profits to the Alaska Psychiatric Institute to improve care for mentally challenged Alaskans?

University of Alaska Foundation:

Cash and Investments: $245,610,000

Profit in FY 2018: $28,708,000

Value of land contributed by the state of Alaska: $151,000,000

The UA land, over 151,000 acres, is booked in their financials at $201 per acre, but valued by professionals at a minimum $1,000 per acre. Should the University of Alaska Foundation swap its remote residential properties for oil bearing lands in ANWR or Kenai and dividend half its increased earnings to higher education?

These two state agencies have another $932 million in cash and investments and literally billions in land not generating a decent rate of return. Reorganization and refocus of agencies is a must to get this state fiscally back on track.

Gov. Bill Walker was retired after capping the dividends for three years. The Legislature has the largest freshman class (12) in decades after capping the dividends. Alaska is a representational democracy. Consent of the governed is required. If Legislators reject the will of the people, they too must too be retired to protect our Permanent Fund.

As long term Permanent Fund Defenders, Dunleavy and I have challenged legislators to submit their plans to cut the dividend to you, the people, for your approval. The House Majority’s latest concoction, an empty promise of a $3,000 dividend this year then cutting future dividends in half, defines hypocrisy. Legislative hearings underscored the public outrage at the duplicity.

Constitutional protection is the only way to stop this annual charade of raids.

Jim Crawford is a third-generation Alaskan entrepreneur who resides in Anchorage with his bride of 35 years, Terri. He is the former president of Permanent Fund Defenders LLC. The Alaska Institute for Growth is a local think tank Jim runs which studies and reports on and may sponsor projects of sustained economic growth for the Alaskan economy.

One Response to Crawford: A billion here, a billion there – Alaska Mental Health Trust and the University of Alaska endowment

  1. Randy S. Griffin Fairbanks Alaska June 9, 2019 at 3:22 am

    The Jim Crawford June 1, 2019 article is titled:
    “Alaska agencies, cities and boroughs are hoarding cash”

    The article indicates that the Fairbanks North Star Borough has a “net position” (net worth) of $531 million. The area of the Fairbanks borough is 7,444 square miles, but the vast majority of it is state land, not borough land.

    I don’t know if the “$531 million” figure covers all the borough buildings and schools and wilderness land as well as any pots of money.

    But a Feb. 11, 2018 Fairbanks Daily News-Miner editorial had the following title:

    “Borough struggles to cover millions of dollars in maintenance needs”.

    The Fairbanks Newspaper editorial said:
    “The borough has a list of capital maintenance and projects adding up to $267 million.”

    As a Fairbanks resident, I’m not aware of a bunch of spare cash that the Fairbanks Borough can send to the state, to jack up the dividend checks for people living down in the Anchorage area.

    The June 1, Jim Crawford article said Texas has a permanent fund of $44 billion. The article indicated there are a total of 9 states down there, that have permanent funds. But I’m sure none of them give out dividend checks to individual citizens. The City of Fairbanks has a Permanent Fund of about $130 million. It is a POMV type fund, and 4.5% is drawn off annually to support city government services. No dividend checks are passed out to city residents.

    The Fairbanks city permanent fund is designed to be perpetually sustainable. We, in the Fairbanks area, can’t afford to hand over our $130 permanent fund over to the state, so that people in Anchorage can get a pumped-up PFD, so that they can take a trip to Hawaii or Las Vegas.

    The article wasn’t suggesting that we hand over our city’s permanent fund, but it seemed to indicate a desire to chop off revenue sharing from the state.

    The June 1 article said that the “net position” (net worth) of the
    Alaska Housing Finance Corporation is $1.5 billion.
    Alaska Industrial Development and Export Authority is $1.3 billion.
    Alaska Energy Authority is $1.5 billion.

    The June 1 article suggests that those 3 state agencies hand over most of that money to another part of the state, evidently to pump up the PFD checks.

    I don’t know if that is a good idea or not.

    The bottom line is that I’m in favor of giving out the biggest PFD check that can fit in a balanced, and honestly sustainable budget (without a state income tax slapped on hard working Alaskans).

    State senator Chris Birch proposed a “balanced budget dividend” which would be a $900 PFD. That sounds good to me.

    The above, June 8, Jim Crawford article states that the “cash and investments” of the “Alaska Mental Health Trust” is $686,476,000.
    The University of Alaska Foundation is $245,610,000.
    They also both have lots of land. I’m all in favor of using that land to make money.

    The most important thing is to not exceed the statutory 5.25% annual draw limit on the Permanent Fund’s Earnings Reserve Account (E.R.A.). That would be a terribly wicked and irresponsible thing to do.

    If people absolutely insist that they must have a giant, bloated, budget busting PFD, then I would suggest sucking the extra money out of the CBR. That would be somewhat irresponsible, but it would not be as bad as taking it out of the E.R.A. and breaking the sacred 5.25% draw limit.

    I would like to get a pure and honest PFD, that fits in a balanced budget, this coming October. I could sure use the money. But if an evil and grotesque PFD that smashes a balanced budget is sent out, then the check will have become contaminated and rancid, and I will refuse to accept it.

    Reply

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