Failure to pay the dividend according to statute has created political chaos

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By JOE GELDHOF AND JUANITA CASSELLIUS

For a long time, significant issues about our Permanent Fund have been bungled and avoided.

How long? Too long — since 2016, when then-Gov. Bill Walker decided to ignore the longstanding formula to pay the Permanent Fund dividend embedded in Alaska law.

The failure to pay the dividend according to statute has created political chaos. Every legislative session since Walker vetoed the dividend payment has seen political fighting over the size of the dividend. Without a fix to the dividend fight, Alaska cannot adopt a sensible fiscal plan.

The time to act on the dividend formula is now. Pointing to higher oil prices or using the upcoming election as an excuse to continue avoiding decisions is unacceptable. The financial well-being of Alaska is deteriorating because of the inaction by our elected officials. Action is needed now, not down the trail.

The best way to solve the annual dividend brawl is to put a workable dividend formula before the voters as part of a constitutional amendment. In order to fix Alaska’s fiscal uncertainty, the first step is to address the dividend and then work on government needs and revenue measures. Alaska’s citizens and their dividend must be addressed first, not government spending, taxes or any other issue related to solving the fiscal situation of our state.

The Permanent Fund is the greatest thing we have done for Alaskans since statehood. The fund takes a portion of our current non-renewable revenue from oil and holds those funds in trust for the future.

Instead of allowing the current generation to spend all the funds on themselves, we wisely saved for the future.

Providing a fair dividend to every Alaskan prevents a raid on the fund in multiple ways. Without a dividend, individual Alaskans are without a stake in their savings account and the fund will quickly become less than permanent. As former Gov. Jay Hammond once warned: “As go the dividends, so goes the Permanent Fund.” Without dividend protection, we risk losing the fund in the future.

The annual failure of our elected officials to adopt a fair and sustainable dividend formula is corroding Alaska’s political discussion. Instead of acting decisively on the dividend, too many politicians have avoided difficult choices. Since 2013, the Legislature has gutted Alaskans’ savings accounts, spending more than $20 billion to fund government.

Now, with oil prices elevated and federal funding flowing into the state’s treasury, far too many politicians are seemingly content to avoid dealing with the citizen’s dividend or putting our fiscal house in order.

We need to act now. But we need to act responsibly.

Current proposals to use the Percentage of Market Value, or POMV, formula to fund government and a dividend have potential to erode the value of the Permanent Fund.

The current dividend proposal based on a 5% POMV payout is set too high. With inflation running at more than 5%, the 5% POMV — with 50% to government and 50% to dividends — presents an unacceptable risk to the fund’s growth.

Other threats to the Alaska Permanent Fund loom. There is increasing evidence select individuals and special interests are salivating at the prospect of investing the Permanent Fund in pet projects that are not competitive based on normal prudent investment criteria. We are dangerously close to politicizing the investment criteria for the Permanent Fund. If we allow this to happen, the best idea we Alaskans adopted in our statehood history — the Permanent Fund — will be destroyed.

Alaska’s elected officials have repeatedly demonstrated an inability to spend money responsibly. Saving money has also been a problem. Many of these elected officials overpromise and underperform when it comes to dealing with Alaska’s finances. The Legislature has spent too much and saved too little of our mineral wealth.

That’s why we call on Alaskans to demand that dividend legislation is passed in this 2022 session. The citizens need a constitutional formula and one that works for all Alaskans, not just government.

The formula needs to protect the fund from inflation. And the formula needs to grow the Permanent Fund, not just government.

The formula should provide every Alaskan with a guaranteed dividend derived from their Permanent Fund.

We must avoid converting the Permanent Fund into a development slush fund to back dubious projects advocated by special interests.

The only way our elected officials will protect the Permanent Fund and your dividend is if voters demand protection of Alaskans’ commonly-owned resource wealth.

Joe Geldhof is a lawyer in Juneau and a board member of the Permanent Fund Defenders. Juanita Cassellius is a nurse in Eagle River and coordinator for Permanent Fund Defenders (www.pfdak.com).

73 COMMENTS

  1. The big labor unions want to take the PFD for themselves. THAT is the corruption at the heart of this. That’s why they ran Vincent B.

    Restore the PFD to its original formula NOW, or resign your office, all of you! You have been corrupted by big Labor and anyone with a half a brain knows it.

  2. What is wrong with simply re-establishing the validity of the original statutory formula and undoing what the Walker/CCP/misogynist administration and the legislature did to create this mess to start with? What will it take to do this? Clearly we can’t depend upon the legislature to undo it anymore than we can depend upon them to cut their own per diem. Give me a process whereby we can force the undoing of this travesty, and don’t ask me to settle for less than the full PFD since 2016.

    • Buck does not stop with Walker…We all got Micciche’d last year. Him along with Shower and Bishop truly hosed us.

  3. Good statement of the issue, but no careful detail of the solution: a Constitutional Amendment to enshrine the Statutory Formula. The Legislature will never pass this – too many people & interests screaming for more State funding. The only way this will be solved is through a Constitutional Convention – and yes, that Convention could open a huge can of worms – but do it we must.

    • Have Joe G check his numbers. 5 of 6 year POMV formula actually yields only about 3.6% of current POMV. Too conservative and helps to explain why, when APFC in 2019 predicted fund would not hit $80 Billion until 2028, today we are $4 Billion beyond schedule SIX YEARS early.
      Roger Holland Senate District N

  4. “In order to save the Permanent Fund – we have to destroy it”
    This column is so twisted and convoluted in its logic I don’t know where to begin.
    Bottom line: Joe Geldhof is in favor of a State income tax so that taxpayer money can be re-distibuted in a fatter Dividend check.
    NO to a Constitutional Convention! NO to putting the Dividend in the Constitution!

    • Is it so convoluted that it calls for an income tax? I don’t recall specifying an income tax was necessary. I, along with my friend and fellow PF Protector Juanita, were attempting to lay out some critical issues facing the PF. Both of us believe the PFD is an essential link between Alaskans and their PF. We both believe leaving the payment of the dividend to the pols will inevitably lead to a situation where government and not the citizens gets first dibs on funding.
      Personally, I am a citizen first and government second kind of guy. I never viewed the PF as some sort of rainy day account for government and I believe I stand on good ground in this belief as that belief was held by Elmer Rasmussen, Jay Hammond and Clem Tillion, among others.
      But hey Chris Nyman, if you are a big government first kind of guy and want to take all the revenue generated by the PF for government, knock yourself out and advocate for that outcome. I like paying a reasonable and responsible dividend to each and every Alaskan as a reflection of their ownership in the PF. That’s just how I roll.

  5. I am grateful for the Permanent Fund chiefly because it protects Alaskans from a state income tax! Only the most devout communists would propose and support an income tax concurrent with an income tax; paying hundreds of state employees to hand out checks regardless of initiative or effort to then turn around and seize income from only those who have shown initiative or effort. Yes, the current political situation is hurting every Alaskan and it came entirely from the dishonesty of Bill Walker. One-third of Alaskans on Medicaid; that too is a Bill Walker legacy. Bill Walker and Joe Biden, two of a kind.

  6. Without a constitutional amendment that requires a carefully defined PFD; one backed by a life imprisonment provision for those who defy it there will forever be annual dividend chaos.

    Yes, put the lawlesslature’s feet to the fire NOW but don’t lose sight of the crying need for a permanent solution to the permanent fund predicament.

  7. Why not just follow the law as it is currently written on the books? We don’t go prowling around into other statutory issues and allow governors to lawlessly cast them aside and ignore the original intent of the legislature that passed them into law……..DO WE??
    .
    The statutory PFD was created with formulaic intent by a previous legislature. Why are we disassembling that statute through a politicized debate? These arguments should be non-starters, unless there is a bill to repeal the original statute.
    .
    Bill Walker abused his authority and created this mess. His goal was to take the financial wealth from the citizenry, to which it was legally due, and turn it over to politicians for purposes of growing the size of the government.

    • Artful, you’re correct but – don’t forget the role of the Alaska supreme court, where Chief Justice Joel Bolger wrote that the PFD is a State expenditure subject to appropriation by the Legislature – that is what opened the door for Walker and his bootlickers to steal the PFD. The Statutory Formula was designed to avoid politicization of the PFD. The only way around the court is a Constitutional Amendment, which will have to be citizen-initiated through a Constitutional Convention.

      • One Left-wing kook Judge? And he gets to decide what the law should be…….rather than what the law IS? That’s like one kook governor (Bill Walker) deciding for us all what the law is going to be….. rather than what the law IS.
        .
        Radical kook leftists trying to be dictators.
        .
        The trap door falls open at sunrise.

      • Rich,
        The AK Supreme Court’s decision on the PFD was made by their legal interpretation of “one” word. That’s it. For a good read, go to Attorney McGee’s law review article about the Alaska PFD in last year’s issue of the Duke University Law Review.

        • Mr. McGee’s law review article was brilliantly written. He is a TRUE legal scholar, not some half-wit attorney on a wannabe mission. The Alaska Supreme Court are a clown’s union of disgruntled and clumsy lawyers.

    • Well said. The issue is the shear weight of special interests. Remember Shower and Micciche on the Dukes Show promising us a full check? Then when the rubber hit bed, it was full of special interest at the expense of Alaskans.
      Its frustrating. Neither party cares to upset the cart of special interests since re-election is tied to them.

    • Mr. Dog grrrr: Try and pay attention to what has happened in our little State. The Alaska Supreme Court, whether you like it, whether I like it, whether Clem Tillion liked it or anybody else liked it ruled that the statutory PFD formula enacted by the legislature and used for decades to pay the PFD was not a permissable dedicated fund. The result was the PFD had to go through the annual appropiration process. The basis for this ruling, whether you like it or not (ditto everyone else), was the Alaska Constitution.
      Pay attention here Mr. Dogger — Bill Wielechowski, Clem Tillion and Rick Halford busted their picks trying to uphold the statutory PFD formula and argued the formuala was implicitly dedicated and OK. They lost but it wasn’t for not putting up a good fight and making good arguments.
      Did I mention they lost. That is LOST. The issue is over in that regard and they only thing anyone with the slightest amount of practical skill is to come up with a legal solution that works for Alaskans. That is why some of us are working to put a sensible and realistic PFD formula in front of the electorate so they can receive a little slice of the earnings from the fund that belongs to them instead of shifting more and more of the earnings into government.
      What are you doing to solve the issue except yapping and yipping about the old statutory formula that is deader than a door nail.

      • Naw, Joe. You lack financial common sense and…… well, just common sense. If “fund” is the word that is interpreted to be the constitutional end-all for statutory dispersement, then change the word to “account.” The Alaska Permanent Account.
        Quit your nonsensical legal gymnastics and just say what is right and proper for all Alaskans who understand the plain meaning. The statutory dividend, in quantifiable terms, IS the law.

        • Joe Geldhof needs to quit lecturing us here at MRAK. If he thinks that he is better than us, or smarter than us, he needs to find another forum to whine and opine. Obviously, his ego needs to be checked at the door before entering.

    • Amazes me how everyone wants to blame Walker for doing what he had to do. The person(s) responsible for the ‘theft’ of your dividend are Sean Parnell, Dunleavy, other oil owned legislators, and the oil industry who wrote SB21. Please place the blame where it belongs.

  8. Anyone interested in how our state functions should be reaching out to our legislators right now. With all but one legislator being up for election this coming cycle now is the time to have all of them get on the record of what they do and do not support, which is why nothing will get done this year. They have an ample supply of money to kick the can down the road yet another year. By not doing anything this year, they up the odds of a constitutional convention and the possibility of getting their hands on the corpus of the Permanent Fund.

  9. “……..The best way to solve the annual dividend brawl is to put a workable dividend formula before the voters as part of a constitutional amendment…….”
    That would certainly be easier, faster, and safer than a constitutional convention, but voters would be limited to what proposals would be forwarded.

    • Unfortunately Reggie, that initiative has to pass 2/3 of the Legislature before it can get to a vote of the people. Don’t hold your breath.

      • Mr. Thorne: It’s not an initiative that needs to be adopted. The legislature has to pass a resolution proposing a PFD formula that would be incorporated in the Alaska Constitution. Once a resolution passes both chambers of the Alaska Legislature (it’s not a bill that is subject to a veto), the measure in the resolution would go before the voters in our state for an up or down vote.

  10. REMINDER- Bill Walker STOLE part of our PFD checks. He is now running for office again. Plan on voting for this crook again?

    • Herman Nelson: Bill Walker didn’t steal anything. He chopped the appropriation for the PFD that was enacted by the legislature. He reduced the appropriation for the PFD using constitutional powers. That might have been stupid politically and it might give you reason to vote for someone else but it wasn’t stealing.

      • Joe,
        Are you busy campaigning for Bill Walker? Sounds like it. The same Bill Walker who opened the door wide for the Communist Chinese to come in and control a gasline that runs across Alaska? The same Bill Walker who didn’t properly vett the proclivities of his child-sex offender lieutenant governor? The same Bill Walker who failed to rescue the underage girl who was targeted by Byron Mallott. The same Bill Walker who let’s his assistant Scott Kendall organize election fraud in our state? The same Bill Walker who pals around with corrupt union bosses and hides in his little law office? THAT Bill Walker? Joe… You are losing credibility very quickly here at MRAK

  11. The problem is not “having enough money to fund both the government and the dividend,” the problem is “having to fund an ever-increasing amount of government”. When the government has to choose between themselves and Alaskan families, we know who wins and who gets nothing. And, isn’t it strange who our elected representatives call “greedy”? This publication has cited many times the growth of state government under the current “conservative” administration… when will the collective government belt be tightened?

  12. Excellent editorial. Good points indeed. Also consider that the best way to have money is to make money. Yes we have $82 billion from past resource development, but we have vast resource wealth still in the ground. Let’s have responsible development and job creation. Living off savings works to a point. Beyond that, we need to earn a living.

  13. The dividend theft gives Democrats far more leverage than they ever had. Previously the governor could veto out as much funding as he wanted, without any input from the legislature. Now the governor needs to cooperate with the legislature and beg them to appropriate a PFD. In exchange for a PFD, Dems can extract promises to spend more money on government services. There’s no way Democrats will ever give up this bargaining chip.

    • Not enough – they’ve already stolen more than $13K – in just 5(?) years! If you want to pay out according to Mackey, the amount should be closer to $100K – the growth of the Permanent Fund since Mackey published that idea.

  14. Time to vote yes on a constitutional convention so that we can rightsize the fund back to the people and avoid the catastrophe of the minority majority special interest of Big Government and little people.

  15. Eliminate the dividend and maximize the permanent fund. The fund belongs to the state of Alaska and we as a whole – not individually – are the state of Alaska.

    • Evan, “We” individuals own the fund, not the State… Learn the difference. The fund was created to keep the State, “greedy Political Parasites” hands off from blowing all of the Oil Revenue.

      • This demonstrates the divide between the concept of “for the greater good” and “where’s mine.” The PF was meant to be a rainy day solution to the problems that would occur when the oil ran out. Now the oil has, in effect, run out. Had we managed the PF in a responsible way, we would have enough money to run the state, virtually, in perpetuity. Now we have people fighting over what’s theirs and and what’s someone else’s, and there is only one person at the top of their list.

          • So, we’re doomed to a world of Where’s Mine? What about the common welfare, something that is alluded to in the Constitution.

          • Homo, every one of you statists consistently fail to recognize that the best way to support ‘the common welfare” is by supporting and upholding individual rights.
            Collectivism always, ALWAYS ends in tyranny, misery and despotisim. Always.

      • Bob is on to something and essentially correct. He was around when the PF was discussed and created. It wasn’t expressly for government operations in the future or specifically for paying a dividend. It was kind of open-ended but the critical point all who helped create the PF back in the day was to stop blowing every stinking penny that flowed into the treasury from non-renewable sources like oil. The idea was to preserve the wealth for the future and not have the then present generation squander the entire load of fund and instead preserve some for the future.
        The future is here, now, and some of use would like to keep growing the PF, pay a dividend to the owners (the citizens), from the earnings of the fund and then pay some for services provided by government.
        From my perspective, put the citizens first, keep growing the fund and the, and only then, fund government with the extra earnings.
        Thanks Robert! Stay warm up there in Kotz.

        • “The Alaska Permanent Fund was created by the people of Alaska in 1976 as a way to save a portion of the state’s oil revenues for the needs of future generations.” Those needs became PFDs later after much hand wringing about whether/not those should be based on years in State (pushed by Hammond and nixed by USSC).
          Pretty clear these “needs” could be govt. services to Alaskans but nobody even dreamed of PFDs at the time of creation of PF. And I’ve noticed you’ve not, so far, suggested what is a “reasonable and responsible PFD.” Likely this would be something that would pass an election but difficult to determine in an election year IMO.

  16. I think we should turn the entire Permanent Fund over to Duchess Natasha von Imhof and the Rasmuson Foundation to blow on all their favorite causes, non-profits and preferred people.

  17. Governor Dunleavy tried to get a constitutional amendment proposition pass the greedy legislature, only to have the legislature block it. They are still doing that, even after he called them back four times last year, and still called for a vote by Alaskans on a PFD constitutional amendment in his state of the state speech this year so the legislature could get to other things. But the legislature power brokers – Edgmon and von Imhoff among them, do not want that; they want the good old days under Walker back. They have also turned a blind eye, as have the press, to the different attempts by Walker and his cohorts to sabotage Dunleavy’s term by everything from a recall petition (Scott Kendall) to the new voting system (designed by Scott Kendall). When are Alaskans going to have enough of this dirty politics and vote some of those legislators out?

    • Fantastically simplistic comment disconnected from reality. See comment responding to Dog grrrrr, above.

      Keep fishing Fishing. Try another lure or put on some new bait. You got nothing going that is going to catch anything here.

  18. I keep seeing and hearing about a constitutional convention; has anyone put any thought as to who the selected individuals will be involved in this convention. How do they get selected? Who selects them? If it has any or much to do with our current legislative leaders, I’m a NO vote. Look at who represents Anchorage currently in our local government…. save 2 assemblypersons, this should scare everybody!

    • In Biz & for Kids: A lot (but not all), of the folks salivating to be part oa new constitutional convention are political hacks and oddballs with a peculiar agendas they would like to ram through during a constitutional convention.
      Pick your favorite political poison and you can be sure someone will be hawking it at a convention if we the people vote to convene one later this year when the issue will be on the ballot.

      • So how do these people get selected and who selects them if the stat e vote does authorize this convention? After all, we now have rank choice voting that two major parties were opposed to.

  19. Let’s have a constitutional convention where no government employee or contractor can be a delegate. And let’s correct the fact that Alaska gives away our oil for a tiny fraction of what the rest of the world gets for theirs. And let’s fix healthcare by eliminating certificates of need, and implementing a strong patients bill of rights, with prison time for violations. Oh yeah, term limits for all!

    • I don’t think there is any way to regulate your wish. the unfortunate result is that government employees and contractors would likely be a majority of those decision makers of a convention

      • Joe, Natural’s suggestions are not both sensible and logical. But naturally you, a government-affiliated apparatchik of long standing, would bristle at the sensible idea of eliminating those most involved with and beholden to government from being (most) able to influence the design, course and growth of that government.

  20. The same way the originals were picked. They must have a sound mind, be 35, be residents of their district, have a couple of references as to character intelligence and be willing. Names can be drawn out of a fish bowl for each region. Most people should pass a naturalization test even if a person of the land, swear to uphold the actual 1776 US Constitution with no purpose of evasion. LEGISLATORS CAN PUT IN THE SAME WAY AS EVERYBODY ELSE WITH THE SAME ODDS OF HAVING THEIR NAME DRAWN.

    • “Names can be drawn out of a fish bowl for each region”. Where do find these rules? The key word here is ‘can’ which suggests there are alternative methods? If the selections were made consistently across every segment of Alaska, I might be in favor of taking the risk.

  21. Also, Congress is notified before and must approve the finished changes after the convention before the changes can be implemented in Alaska. I don’t believe that Congress has met since January in spite of subterfuge and may be in a state of continuance of government mode under an appointed committee and is being invaded at the southern border; influenced by foreigners election just held so the will of the people may not be accessible. Precarious times to choose to give preeminence to stupid people. Bon Chance!

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