By CHRIS NYMAN
The “illusion of truth effect” is the tendency to believe false information to be correct after repeated exposure.
Many may also be familiar with “Stockholm Syndrome,” where victims sympathize with their captors after prolonged exposure to stress and propaganda.
The people of Alaska, regrettably in my lifetime, are suffering from these effects in a way that threatens to destroy the very fabric of the institution we call the State of Alaska.
The trickle-down effect of that is to destroy our economy, our ability to make a living, and the social welfare of our lives.
Here is a summary of the most popular misconceptions:
- You are “owed” a Permanent Fund dividend.
- The dividend is “the people’s money.”
- Reducing or eliminating the dividend is a “tax.”
- The dividend is a beneficial boost to the economy.
- Reducing the dividend is unfair to low-income Alaskans.
The reason I focus this column on the dividend is because it has singularly been the obstacle to creating a sustainable Alaska State budget for the past decade.
The old axiom that “government will spend every cent it can get its hands on” seems to be very accurate whether it is New York, California, or Alaska and even most notably the United States Congress. There will always be the temptation to borrow from the future for the benefit of the current generation.
In Alaska, the Legislature has drained every reserve account it can get its hands on for the past 10 years to prop up unsustainable deficit spending. The Legislature has even decided to drain the Constitutional Budget Reserve (which requires a 3⁄4 majority) instead of over-drawing the Permanent Fund Earnings Reserve Account (which only requires a simple majority).
To add insult to injury, the Legislature seems to have the opinion it does not have to observe the will, or plain text, of the state constitutional requirement to re-pay funds “borrowed” from the Constitutional Budget Reserve.
Keep in mind that up to 75% of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State… (paraphrasing Article 9, Paragraph 15 Alaska Constitution) has already been consumed by our State government over the past 40 years. The other 25% was deposited into the Permanent Fund corpus and thank goodness for that.
For most of that 40 years, the dividend was affordable, as State oil income exceeded the cost of State government. Thus the surplus was available as a “true dividend.”
That changed 10 years ago, and one could argue six years ago when Bill Walker vetoed half the dividend and the Legislature essentially began to reduce the dividend each year and observe a percent of market value strategy for drawing from the Permanent Fund.
Despite this laudable effort, the Legislature continued to deficit-spend by raiding the Constitutional Budget Reserve. Today we are at a point where we cannot afford any Dividend without over-drawing from the Permanent Fund.
Other repercussions from deficit dividends are the minimization of our Capital Budget, out inability to pay off the oil tax credits, and our inability to build back our budget reserve account – the Constitutional Budget Reserve.
Now is the perfect time to suspend the dividend indefinitely. With the pandemic and economic reset we are experiencing – federal aid is expected to be over $5 billion, (5 times the impact of the dividend).
We cannot afford to pay deficit dividends. It’s not an illusion.
Chris Nyman writes occasionally for Must Read Alaska.