By SUZANNE DOWNING
The Anchorage Daily News editorial board set down its martini glasses long enough this week to tell Gov. Mike Dunleavy that his plan for fixing the Permanent Fund dividend was a “clown car.”
The plan is a resolution that is the subject of the special session of the Legislature. It would allow the people of Alaska to vote on a 50-50 split of the earnings of the Permanent Fund. By that, 50% of the available earnings from the Permanent Fund would go to Alaskans as dividends, and the other 50% would be available for the government trough.
This formula, Dunleavy budgeters say, would prevent the account from being overdrawn in the future and would finish the work the Legislature left uncompleted in 2018, when it passed Senate Bill 26, which set a structured draw of the Earnings Reserve Account at 5 percent.
Those lawmakers in 2018 never had the courage to decide how that 5 percent would be split, and because of that, today the overwhelming majority of the draw goes to government, and a slight remainder goes for the Permanent Fund dividend.
Lawmakers and former Gov. Bill Walker left SB 26 incomplete, knowing a day of reckoning would come. The current governor now wants to complete the fiscal plan started by SB 26, by making sure that the way the Permanent Fund dividend is calculated is detailed in the Alaska Constitution, no longer the political football that all lawmakers agree it has become.
Since 2017, the Legislature has chosen to break the statute, and create a politically-charged dividend that has their own heads on the chopping block. It was exactly that “political solution” that cost Senate President Cathy Giessel and Senate Rules Chair John Coghill their jobs in the 2020 election cycle.
The governor has put forth a reasonable proposal to fix the unfairness of the current situation, where Alaskans are perennially the last in line, when before 2016, they could at least count on a fairly determined dividend free of political interference.
You see, Alaskans don’t care how much the dividend is, so much as they care they have been treated fairly.
In its sputtering diatribe, the ADN editorial writers threw adjective after invective at the proposal, and unceremoniously dumped its sponsors in the grease.
Let’s review the ADN’s overwrought word choices: “Horse-trading, mockery, hobbling the state’s future, raid, savings grab, fantastic scenario, cavalier, audacity, inexcusable, shenanigans,” and last but not least, “clown car.”
It was unbecoming of the daily paper to use its senseless prick of the pen to attack the sponsoring senators and governor for trying to put forward a solution. There are 60 lawmakers, plus one governor, and that means there are 61 different solutions for the PFD.
Yet the only one who has offered a solution in the last three years has been the governor. And he has many lawmakers by his side.
Lucinda Mahoney, Gov. Dunleavy’s Commissioner of Revenue, explained calmly on Monday to the House Judiciary Committee that the 50-50 plan the public would vote on would require a one-time overdraw from the Earnings Reserve Account. Some $3 billion would be transferred to the Constitutional Budget Reserve to tide the state over for a couple of years. That would be an exceptional draw, and no question — it breaks SB 26’s “structured” draw.
Then, by fiscal year 2027, the state would be generating a budget surplus.
Meanwhile, in August, the lawmakers will get to return to Juneau to hash out the other part of the fiscal equation — how to pay for government, once Alaskans are getting their 50 percent of the royalties from the resources the state owns. Gov. Dunleavy has a proposal for that, too: Streamlining the budget some more and enshrining in the Constitution a provision that says no broad-based tax can be instituted without a vote of the people.
The Legislature, in the way it is now calculating the dividend, is already breaking statute. Yes, to draw $3 billion from the ERA is also breaking a different statute. The question is going to be: Which statute do the legislators want to break and how often? SB 26 just once, or year after year after year continuing to ignore Alaska Statute 43.23.025, which is clearly in conflict with SB 26, as it lays out the specific way dividends are to be calculated.
If that statutory formula is to change, Gov. Dunleavy wants the people to be part of that decision.
The ADN had to bring up the ghost of Gov. Jay Hammond, resting otherwise peacefully, when saying that Hammond wanted the Permanent Fund to be a “money well” to pay for state government when the oil wells run dry. That he did, and wisely so.
But along with Hammond, the Legislature created the dividend. The argument at the time was that not only should Alaskans share in the oil wealth, but the dividend itself would create a constituency, a third rail of politics that no politician could touch without getting electrocuted. The people would protect the principle. Without the dividend, the lawmakers would find a way to get to the principle and drain the Permanent Fund.
Hammond, like Dunleavy, advocated for fiscal responsibility, and even introduced an amendment to the Alaska Constitution limiting state spending. He was no more successful than Dunleavy has been at trying to get the Legislature to pass curbs on its own spending appetite.
A side story at play in 1974 was that Hammond had very narrowly beat Bill Egan for the Governor’s mansion. Egan was supported by the Teamsters boss, Jesse Carr of Valdez, and it was a bruising battle. Carr wanted government money for jobs for his union members, and the only way he could get it was if Egan was elected for a fourth term.
Hammond knew that the forthcoming oil money needed to be protected from special interests, but in reality it was the Carr’s cartel. By 1980, the dividend was put into statute, and statute was followed unbroken for 35 years.
How ironic that in 2016, it was another governor from Valdez, Bill Walker, this time with the powerhouse political money of Alaska’s Future and AFL-CIO’s Vince Beltrami still wanting to gnaw away at the Permanent Fund money for his special interests. The windfall oil monies of 1976 had been transformed into Aladdin’s cave, with billions of dollars accessible by a simple majority vote in the Legislature, and a willing friend living in the White House on Calhoun Street in Juneau.
Walker broke the faith with Alaskans when he vetoed half of the dividend in 2016 and put it into the Earnings Reserve Account, where it sits today.
And ever since then, the Legislature has wasted its own time and Alaskans’ money dickering over the dividend, even at a time when the Permanent Fund itself is on track to reach $80 billion this year.
Dunleavy has proposed a solution worthy of robust debate. The ADN needs to back away from the bottle and quit taking up arms against Alaskans. We are not the enemy. We are the shareholders.