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.

7 Responses to Crawford: Civil war in Alaska over the dividend?

  1. John j grunza October 11, 2017 at 9:47 am

    Agree totally. The people we send to Juneau are not doing their job. Managing govement budget is not easy and hard decisions are necessary to cut the “fat”from good boy uncessary programs.It is much easier to raid the Fund. And that is what they are doing..We must stop them. And the ballot box is the way to drain Alaska,s swamp.

    Reply
  2. bbg October 11, 2017 at 12:04 pm

    I’d prefer a cash out for long-term residents and a discontinuation of yearly dividends. All they do is attract scumbags to Alaska. If we could have the dividend go away, maybe some of these bums would leave.

    Reply
  3. Observer October 11, 2017 at 5:03 pm

    I appreciate Mr. Crawford’s passion but unfortunately he makes a number of statements that do not have a basis in law.

    Section 15. Alaska Permanent Fund
    At least twenty-five percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State shall be placed in a permanent fund the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments. All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law.

    That’s it. The word “trust” does not appear in the Alaska Constitutional provision establishing the Permanent Fund. Nor is there a notion that citizens somehow “own” the Permanent Fund. Also missing from the Constitution is a requirement that the earnings accrue to the benefit of individual Alaskans — rather, income is to be deposited into the general fund of the State of Alaska.

    Mr. Crawford is correct that the Fund could be changed by Constitutional amendment to include the provisions he desires. I wish him great luck in that endeavor.

    Reply
    • Ira Perman October 13, 2017 at 5:20 am

      Thank you Observer for your posting of Section 15 of Alaska’s Constitution. It tickles me to read what others think is in the Constitution – but isn’t.

      Reply
  4. A.M. johnson October 11, 2017 at 5:07 pm

    I repeat myself: If the folks understood the stock market and the increased value of investments, they will or would be furious when the five year average begins to include the current year into the calculations more if future gains continue . It would be my guess that the annual payout will exceed $3,000.00 based on the market gains which will be increased by the favorable returns on investments other than the stock market made by the fund directors/brokers.
    There will be ballot box revolt given the opportunity to again vote to protect the fund for the intended purposes.
    Please editor, continue to pound this subject, keep it on the front burner.

    A.M.Johnson-Ketchikan

    Reply
  5. Andrew Brewer October 12, 2017 at 8:00 pm

    TO: Observer
    Mr. Crawford is indeed correct. The “unless otherwise provided by law clause” allowed the Legislature the set up the Permanent Fund Dividend statutes which have served us well. The Resources of the State do collectively belong to the People, since they are to be developed and used for the maximum benefit of the people. (Article VIII, Sec 2). We have a unique situation in AK which everyone needs to realize. No, the PFD does not have Constitutional protection. And the AK Supreme Court has ruled that the Gov can veto it, and the Legislature can under fund it, making it no different than any other annual appropriation. That ruling, which is based on the prohibition to dedicated funds, Article IX, sec 7, is why the PFD must be enshrined into the AK Constitution, or the rights of the ppl to their dividend from their collectively held property, will not come to fruition. It was clearly the intent of the founders to not only set aside a portion of the Oil Wealth, but to see that the People of the State actually saw a direct benefit. The citizens of this State have a right to expect a return on their investment, that 1/200th share of the Oil Wealth, as Jay Hammond put it.

    Reply
    • Observer October 14, 2017 at 12:17 am

      I appreciate Mr. Brewer’s passion but once again, it does little good to project things into the language of the Constitution that do not exist. If the voters, in approving the Constitutional Amendment establishing the Permanent Fund wanted to create a link between the Fund and a specific benefit to citizens, then that language would have been included. No such language exists. The Amendment was approved in 1976 and I voted on it. The dividend was no where in sight at that time. If the desire is to put the dividend into the Constitution, then go for it. But please do not make up things.

      Reply

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