Crawford: Civil war in Alaska over the dividend?
By Jim Crawford |
As the Legislature reconvenes at the call of Gov. Bill Walker, Alaskans must beware. Your Permanent Fund is under attack by those who would spend your money on more government rather than manage the budget and maintain your dividend. Alaska Statute is explicit: Pay dividends for 50 percent of the average five-year earnings period. Govs. Jay Hammond and Wally Hickel supported the dividend, fought for it. The dividend connects Alaskans to the fund and protects it.
To begin the process of gutting the fund, Walker vetoed half the dividend last year and allowed legislators this year to set the dividend at $1,100. Statutorily, it should be $2,300. The dividend cuts are an egregious and regressive tax on each Alaskan. They harm the retail sector in recession and hurt people who need them most. This abrogation of elected officials to follow the law can be stopped through a constitutional amendment. In 1976, Alaskans voted constitutional protection of the principle of the Fund. Let’s finish the job and protect our dividend.
This Legislature can pass constitutional protection. Then the people can vote. An amendment must pass the Legislature by two-thirds or by Constitutional Convention. Walker opposes constitutional protection of your dividend. He has capitulated to big spenders who will never be satisfied until they get the Fund.
A Percentage of Market Value was introduced again to set the payout at 5 percent of the fund, regardless of earnings. Legislators choked, remembering the last advisory vote rejecting that change. In 1999, the people voted 83 percent to 17 percent to stop that raid on the fund and will do so again in 2018 if the Legislature joins another raid.
Why do Alaskans get a dividend each year? It is not a government handout, free money, a violation of conservative principles or an attractant to ne’er do wells. For 35 years, the fund has operated efficiently, earned money and paid a portion of investment earnings to the owners of the fund, the Alaskan shareholders. Every man, woman and child living here more than one year can qualify. Shareholders annually are paid a portion of the earnings from their investment account.
The fund is a trust which operates on behalf of all shareholders in a similar fiduciary responsibility to a bank. The investments are not owned by the state or the Alaska Permanent Fund Corp. The people’s und (now $61 billion) grows through prudent investments. Last year’s earnings were $6.8 billion. Special interests are spending millions to convince you that your fund is just another government account. It’s not, you own it. Investopedia.com defines dividend as “a distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders.” Enterprises meet budgets and make profits for their shareholders.
If Microsoft shareholders had dividends cut in half, management would correct the earnings deficit or be fired by the shareholders. Exxon directors would be discharged by shareholders if an arbitrary cut were made. ASRC or Cook Inlet Region shareholders earn dividends from their enterprises plus as shareholders of the Permanent Fund. We have $12 billion in fund earnings reserves. Hickel and Hammond saw fund dividends as the finest example of our owner state.
The purpose of the Alaska Permanent Fund is to earn money for Alaskans. Then we decide how much of the earnings to spend on government and how much is for dividends. The existing statute has worked fine at 50/50 since the first dividend was paid in 1982. Add General Fund earnings to Permanent Fund earnings and understand we do not a fiscal crisis. Hammond’s fiscal plan worked. Our billions in reserves prove we can manage the budget without cutting Alaskans’ dividends.
The Alaska Permanent Fund will only be protected when Alaskans say, just as we did in 1999, that we accept no change in the distribution of the fund’s earnings without a vote of the people.
Jim Crawford is the new president of Permanent Fund Defenders, an Alaska based educational nonprofit corporation based in Eagle River, Alaska. He is a lifelong Alaskan who co-chaired the Alaskans Just Say No campaign to stop the raid on the Permanent Fund in 1999. He also served Hammond as a member of the Investment Advisory Committee which formed the investment and corporate strategy of the Alaska Permanent Fund Corporation.