By JIM CRAWFORD
Alaska’s fishermen are going to be financially hurt as a result of the COVID-19 coronavirus. Restaurant workers are being furloughed. Tourism companies are suspending operations. Cruise liners are parked.
Some suggest the solution for Alaskans is to cut the Permanent Fund dividend to zero.
The Alaska Permanent Fund is not the Legislature’s money nor the governor’s money. It’s the people’s fund, a financial stabilizer, managed for you, the beneficiaries.
The fund was mandated to invest 25 percent of the royalties when established by Constitutional Amendment as a dedicated fund.
The other 75 percent of royalties plus all the taxes and tariffs and other numerous ways to grab money from the oil patch were retained for legislative purposes.
Now legislators and others want your 25 percent of royalties plus the entire earnings of the fund. Legislators tell us that we’re lucky to get whatever is left, after their spending.
The Permanent Fund long-term yields have been good and can lead to prosperous Alaskans. With dividends, we have a direct individual benefit for developing our natural resources, just as Gov. Jay Hammond intended. The PFD diversifies Alaskans’ income stream adding investment income from the fund for education, retirement and making affordable the higher cost of living in Alaska.
A waitress with a husband and two kids earns $12,000 in dividends this year under existing law.
That $12,000 can pay rents or mortgages due during the layoffs. Just change the payout date from October to April.
Fishermen and tour operators — indeed all Alaskans who will be hurt by the coronavirus pandemic — can get by if their full Permanent Fund dividends are paid. That’s because of good planning by our forefathers.
Gov. Hammond would be well pleased that when the fund is left alone, it provides substantial direct benefits to Alaskans. Greater security, more affordable education, and cash reserves for emergencies like the virus are all benefits of abiding by the original calculation of the dividend.
Make no mistake, we already have the earnings – in cash. Anyone who tells you we don’t, can’t read the Comprehensive Annual Financial Report of the State of Alaska.
Our problem is our legislators passed two conflicting statutes, both on the books for calculation of the dividend. The first one is our historic 50/50 split. Earnings are evenly divided between the people’s dividend and General Fund appropriated by the Legislature.
But, the Legislature enacted a “per cent of market value” approach that reduces the amount that can be drawn and shockingly, removed the calculation for earnings.
The Legislature, for three years, has divided the earnings with bloated government as the winner and the people getting the short end of the stick.
The solution to our fishermen’s cash flow is not to further cut a family’s cash. The same is true of tourism employees, retailers, restauranteurs, and other Alaskans who are experiencing financial turmoil as a result of the virus. Our cash cow has had great earnings. The Legislature simply wants to butcher it – and use all the money to grow more government.
Alaskans have had enough and don’t want their PFD reduced or ended.
An alternative way back to fiscal sanity is to stop the Legislature from dedicating funds. The Alaska Constitution bans dedicated funds except for federally provided revenue and those funds in existence when we became a state. Or, we can do as we did when the Permanent Fund was established, with passage of a constitutional amendment by the people.
One unconstitutional dedicated fund is the Power Cost Equalization Fund at $1.2 billion, housed in the Alaska Energy Authority. AEA financial statements describe the PCE assets as restricted and not available for government spending. That’s a dedicated fund. There are many in state government.
The Supreme Court ruled that dividends must compete with all other appropriations. But, the Legislature unconstitutionally protects the PCE. PCE doesn’t compete for appropriations, but your PFD does. Special interests are pleased.
The Permanent Fund must return to averaging our five-year earnings to calculate the dividend. The market turmoil of today then becomes a blip on the screen of our long term investment program. Yes, stocks and oil go up and down. That’s why we insisted on the five-year earnings average. A down year is not the end of life.
Most Alaskans are off work awaiting clearance to return. We have time to communicate directions to our Legislators. My message to my Senator, Natasha Von Imhof and my Representative Chuck Kopp is simple: Rescue our economy from the damage of coronavirus by voting to pay a full dividend. Please change the date to April 30, 2020.
If you fail in this effort, I will vote against you. I will not vote for Legislators who damage the people who elected them. Alaskans, if you agree, please share the instruction with your Legislators. After all, they work for you.
Doctors will solve this coronavirus and in time, we will be stronger as a result. Doctors take a Hippocratic Oath, paraphrased as “First, do no harm”. Legislators should take that oath for our Permanent Fund dividend.
Jim Crawford is a third generation Alaskan entrepreneur who resides in Anchorage with his bride of 36 years, Terri. He is president of The Alaska Institute for Growth, a local think tank which studies and reports on and may sponsor projects of sustained economic growth for the Alaskan economy. Crawford was a member of the Investment Advisory Committee, appointed by Governor Hammond to plan and implement the Alaska Permanent Fund Corporation.
Wow! This is the most clear and concise argument I have read to date. Thank you, sir for taking the time to articulate what the fund was intended for. And to let the politicians know that their days are numbered if they keep trying to blatantly steal from Alaskan residents.
My sentiments exactly!
Very good and factual read…but we’ve dreaming to think that our legislators are going to give us a full dividend. Due to the Coronavirus, with all the businesses been closed and employees being laid off the constituents need a full PFD to survive. At present it’s about the only positive flow of income available to the state. Over the years the legislators and governor’s have found loop holes in which they have reduced the yearly PHD payments to it’s constituents. It will probably get worse before it gets better. It was our past legislators that gave the oil companies incentives and tax breaks that have put the state in the present financial situation. If you’re not happy with your legislators you shouldn’t vote for them in the next election. Unfortunately that probably won’t solve the problem either.
Thank you for your article, good read, wishful thinking ! The democrats in the driver’s seat at this point have shown their “true colors.” Voting them out can’t come soon enough, given the current crisis.
So how are we going to fix it?
We need the whole dividend including what has been stolen from us. All the Land and All the Resources belong to “We The People” to begin with and the Permanent Fund is just a very small piece that and the Legislature wants that too. Make a Stand!!
Seymour Marvin Mills Jr. sui juris
Alaskan Legislature take heed or be voted out !!!!
Yeah, it’s going to get ugly around here. I am the only one in my district that lost money so far….$2000. If the house majority is breaking the law, why not send a car load of troopers to arrest the perps? If they have a loop hole, then the only solution is to vote them out. It’s a simple concept. They work for us, and if we grow tired of their antics or are not being put first in line, fire them. WHEN Bristol Bay turns into a ghost town, maybe their stock won’t be as high. Sometimes, we have to hit rock bottom before we can start our way back up. We haven’t seen the bottom yet. Trump will allow some low interest loans for the fisherman’s loss. A loan…you have to pay it back folks. Right now, some 2 year old freezer burned dried smoked salmon is looking pretty good to me. Things will shine again after the Chinese virus is defeated, but to clean up the house majority, you need to sweep out the crud. Good ole fashioned spring cleaning is in order. Men and women with good intensions are sometimes lead astray.
Thank you Jim…you Have done far more to represent us the citizens than far too many of the elected. Thank you to those few elected persons who, while in the minority, in Juneau who DO represent us NOT resent us.
Locally I applaud SARAH VANCE, and BEN CARPENTER. Remember each and every elected person who dared to stand for you dispute they hardships that the empowered majority dealt out to our representatives who stood and stand up.
The PFD is not to be a token coin toss to peasants.
Special interests have the legislators in their pocket- of maybe the other way around!
I was listening to an afternoon talk show yesterday, and a guy called in support of Chuck Kopp, saying how he was “the state employees best friend” by making sure they got their money and benefits. The host countered by asking who was watching out for the regular business owner or citizen who may now be out of work. He was right.
Want to see special interests, download the whole Alaska Lobbyist Directory, save it as an Excel spreadsheet.
You’ll see who bought whom for what and how much. And how many lobbyists there are!
Sadly, it’s very easy to use and key words to find out which lobbyists happen to be driving the crisis of the day.
What you won’t find is anybody lobbying for, or representing “…the regular business owner or citizen who may now be out of work”.
Can’t imagine why…
Campaign brochures this summer and fall will include the name of every legislator, who is up for reelection, and voted against the full dividend and the special payout. Each one should lose their seat. No exceptions.
I wholeheartedly agree with Jim Crawford. I might add that Oral Freeman, ( a Democrat) introduced the idea of the fund for the sole purpose of keeping the Legislator’s grimy mitts from spending ALL the Oil Wealth! This was the Original Intent of the Fund.
Other writers on Must Read including Joe Geldof have championed an immediate PFD disbursement during this crisis. I believe Joe likened it to a “rainy day” account, this would fit well with the original intent of the fund. Sadly however the legislative body is filled with folks like Andi Story, Representative from the Mendenhall Valley who reportedly gushed in praise of the freshly passed FY 2021 budget since it fully funded Public Radio! Whether you like Public Radio or not just remember that your dividend was reduced by over 60% by this Representative and others like her.
Unfortunately the Legislature has already recessed (not adjourned though) and is not going to be taking up any pro-PFD legislation any time soon. It is now going to fall to our Governor in his capacity as the Executive Authority during an emergency, an emergency health crisis that has spilled directly over into the private sector economy, impacting the livelihood of many tens of thousands, and indeed all Alaskans…. If he cannot order the transfer of the Dividend Funds, and there is some doubt that he can, then he is still able to respond using AS 23.26.050 to address this crisis as needed. Yes, there is a recall pending, that tempers that response, but it is also the recall that should make his response imperative… The call for the Governor to act is growing…
That’s Alaska Statute 26.23.050
Very well said.
If you want to kill the snake, best to cut off the head.
Damn thing has a lot of heads.
And they grow back.
Starve ’em so they eat their own, we might have a chance….
It’s not a hydra. Only one head in this case.
Nice essay, Jim. I hope you win your seat and head to Juneau in 2021. And please don’t do what 80% of Alaska legislators do when they go down for Session. They forget that they represent the people’s interest first…..and they soon become vested in “state” interests and then become stoolies for lobbyists.
The state is going to receive over 1.2 million from the federal government. Each qualifying person will get $1200. Each child $500. Maybe it is time for the state of Alaska to hold onto their savings. It is ridiculous to continue to pay for people’s vacations and toys. We have created an economy based on state money. With less coming in it is pretty clear that is not sustainable. People need to learn to live within their means and save.
Oh please! The $1200 is already spent from lost wages. I’m selling my “toys” just to pay bills. Give me a break.
Some people obviously have a comfortable enough income that it enables them to look down their noses at low wage workers who live fm paycheck to paycheck. Workers who struggle to keep their beater with a heater running so they can make it to work. And only dream of having “toys” and going on vacations, or being able to actually save some money. Exact same attitude of our legislators looking good down their noses at the disgusting unwashed masses who deserve their lot b/c they are not worthy of any consideration. Class snobbery is alive and well.
I respect all working people. I agree with the point Camai made. In my opinion things will get worse. With the glut in oil I think we are seeing a real risk of an oil production slow down..
The same people that are promising you a dividend also want to cut funding to the division of public assistance. In my opinion the services that the division provides is going to be more important to many Alaskans than an additional $1000 or even $3000 in their pocket.
Nice article. I almost agree with paying out the dividend now. However… I think that things are going to get worse. They are going to get a lot worse. I can ride the storm for a little while on what I have (my very meager savings and rainy day emergency fund -Thanks Dave Ramsey.) I can go a few months if I am really frugal I won’t have to bury myself in debt and will survive. I know that there are MANY among us who need that help right now but in a few weeks they’re going to be desperate for it. This is going to get worse…a lot worse. Wait a few weeks and then get the money out there. Our federal checks are coming. I think we’re really going to need this Alaska money sometime a bit later than right now.
What makes you think all Alaskans use the funds for toys and vacations ?? Do you receive a dividend? If so, do you plan on returning it or using it to service or repair your fishing vessel ?
I have not received a dividend for at least 4 years. There is a statement on the application.
– I am now and intend to remain an Alaska resident indefinitely
I am gone from Alaska a lot now and cannot honestly answer that question yes. I do not apply. Any money invested in my business is money earned from my business.
The CARES Act includes money for commercial fisherman. Hopefully it is enough to get fisherman through this crisis.
Thew new unemployment benefits should ease the pain. I am not an expert on them but what I am reading. Alaska raising to $75 per dependent. Than an example I found.
Let’s say the average worker becomes unemployed on March 27. They will be newly eligible to receive roughly $190 per week (half of the national average) plus $600 per week, for a total of $790 per week for up to four months until July 31. For the remainder of their 39-week benefit window, or until about December 25, they will receive $190 per week.
I would think this should cover most people. I am not sure if I am correct but it appears Alaskan’s could be bringing in close to $1000 a week. Their normal benefit plus $600. I am not sure about this.Maybe someone here could clarify.
Very good article Jim.
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