Brennan: Hammond had it right
By Tom Brennan
Jay Hammond’s idea for a Permanent Fund dividend is having an important impact on state spending.
The dividend, and finding ways to pay it, is creating pressure on Alaska’s elected state officials to keep spending on state agencies and projects down.
The state is still sending out individual dividend checks of roughly $1,600, but the approved formula would actually mean checks double that size. Fortunately cooler heads have prevailed and the Legislature has been keeping the payments down to prevent overdrawing from Permanent Fund reserve funds.
It’s an interesting dynamic and seems appropriate for the situation we are in. I’m not sure Hammond, Alaska’s governor from 1974 to 1982 and the guy who got the Permanent Fund established in 1976, foresaw that would happen. But perhaps we should give him the benefit of the doubt and assume that was just what he had in mind.
Momentum for establishing the Permanent Fund began after the Legislature blew through the $900 million taken in from the 1969 oil lease sale with lightning speed. That prompted civic leaders like Anchorage Times Publisher Bob Atwood to urge creating a fund in which we could sock a portion of future oil revenues to fund government in lean times.
Hammond took that up as one of his major goals — and he succeeded admirably. The dividend seemed an afterthought, but his advisors like Clem Tillion said Hammond had it in mind from the beginning, but delayed unveiling it in the early campaign, presumably for tactical reasons.
The fund, which now stands at just short of $67 billion, receives 25 percent of the state’s oil royalties and that money is invested. The fund is well-managed and its investments are a major source of its revenues.
With oil revenues down due to declining throughput in the trans-Alaska pipeline and sinking oil prices, the fund’s $67 billion represents a tremendously valuable nest egg. It is currently a major source of funding for state operations as well as those lovely dividend checks.
Our state leaders are being coy about their plans for this year’s dividend checks. It seems unlikely that the approved formula will be followed since that would require dipping rather deeply into the fund’s earnings reserve. The total checks would be something north of $3,000, but most of us would settle for anything resembling half of that.
My wife and I had dinner the other night with a couple from Seattle. The guy knew that Alaska did away with its income tax in 1980 and that the state pays every person who has lived here for a year or more a dividend. He kept shaking his head at the thought.
Alaska is the only state where such a situation exists and it is a matter of pride for most of us. But one can’t help but feel a little guilty when explaining it to visitors.
And I must admit that it’s time for me to recognize that Jay Hammond’s vision was a good one and surprisingly accurate.
So with the power vested in me as an English major, I hereby declare and recognize that Gov. Jay Hammond was right all along. And the financial support Alaska has now during lean times is just what he had in mind back then.