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