By JIM CRAWFORD
We hear a constant barrage from folks who want to decrease the Alaska Permanent Fund dividend and reinstate the personal income tax.
With the price of oil going up, tourism roaring back and the corpus of the Permanent Fund growing 25 percent in the first ten months of FY2021, you’d think there would be room for optimism in today’s discussion. There is around the state, but a sour note blares by the Legislative majorities in the House and the Senate. Their latest gambit is to threaten folks to cut our dividend to $525.
Here is the math that effects this fiscal year’s PFD. The fiscal year ends June 30, 2021.
Beginning PFDC accumulated capital as of June 30, 2020, $65,302,000,200
Value June 17, 2021, $81,037,400,000
Increase over the last 11 months $15,735,400,000.
Admittedly, I use intake and exhaust accounting. You know: How much in? How much out? What is left? Just like when we do a home budget.
This year, $3.1 billion was drawn by the Legislature for more Jabba the Hutt spending. Most went to state spending. But that does not end the debate. That still leaves $13.1 billion left in the fund from past earnings to increase investments for future Alaskans. Add another $6.5 billion in covid fed funds and another $1 billion for next year. We received over $20 billion in spendable cash for Alaska above and beyond normal state expenditures.
The legislative leaders, however, have a different perspective. They voted to cap Permanent Fund distributions at 5 percent of the Fund, regardless of the actual earnings of the Fund. They got $3.1 billion and kept the rest. This year, the fund so far has earned 25 percent more than our beginning balance. Now, they use that POMV cap as an excuse to cut the dividend, again. Some even say we do not have the money. Shamelessly untrue. Government never has enough, it’s a bottomless pit.
If you had an overdraft of $1,000 in your credit union checking account and did not count the $1 million, you had in savings, you could be a Senate leader. That’s what the Legislature did last year when they had more than enough cash in the General Fund and Earnings Reserve Account to pay for the budget for this year but claimed we were broke. You can prove we have the money just as easily.
We can easily afford to pay out the full statutory dividends this year in 2021. I’ll take mine without a hint of greed or feeling of entitlement. These guilt trips are nuts. Alaskans made a good decision 40 years ago to save 25 percent of royalty income. We hire people to invest it for us and even agreed to allow the Legislature to spend 50 percent for government as long as the other 50 percent directly benefited Alaskans through the dividend. It’s private sector, capitalism driven, and a successful exercise in economics. Now, if the Legislature cannot accomplish our objectives, a Constitution Convention can.
The 5 percent percent of market value (POMV) cap is a statutory recommendation from one Legislature to the next and can be changed by a simple majority in both houses.
In Alaska, our Constitution says that we cannot dedicate funds without public assent. This means that the portion of the earnings reserve account with $11.3 billion on April 30, 2021, can fund the dividend. The statute on the books requires dividends be paid based upon earnings, cumulative and averaged for five years. The formulae worked for 40 years until the Legislature trashed it.
Last year’s POMV draw, which overran earnings, reduced the principal balance of the Fund by $998 million. Just check the financial statements of the Alaska Permanent Fund for Fiscal Year 2020. In investing, what counts is the earnings, not the balance in the Fund. Returning to an earnings requirement is the only way we can guarantee our grandchildren will receive an equitably shared, sustainable dividend.
Legislators now argue that they cannot adjust the cap they themselves created with the POMV. They obviously can, and they should. Our population in Alaska has shrunk. Our employment is on the mend but has a long way to go. Our people need cash to rebuild their lives and businesses.
The good news is that our state has more natural resources including cash on hand than any other state in the United States. Alaskans are unique that we saw the opportunity to invest our savings and turn barrels of oil into barrels of renewable cash. But legislative leaders demand more spending for government and smaller dividends for Alaskans.
In politics, I’ve heard the admonition: “Lead, follow, or get out of the way”. These legislators must get out of the way for Alaskans to prosper.
Jim Crawford is a third-generation Alaskan entrepreneur who resides in Anchorage with his bride of 37 years, Terri. Capital Alaska LLCis a capital funder which studies and reports on and may sponsor projects of sustained economic growth for the Alaskan economy. Mr. Crawford known as the Permanent Fund Defender was a member of the Investment Advisory Committee, appointed by Governor Hammond to plan and execute the Alaska Permanent Fund Corporation.
Very well said.
Just plain old school common sense, Mr. Crawford.
Thank you for a concise explanation that cuts through the smoke generated by our own legislators. That you were at the table in the beginning and can cut through the conflicting narratives is a godsend.
Absolutely correct! Our legislators need to be put on a spending diet. Run our government like a business and not aa charity and we will do well!
Best statement of fact I have read!
Well said . Now how to get those idiots in Juneau to comprehend …..
Those inconvenient legislator jobs interfere with beer pong and leg wrestling. Hopefully a new better crop will enter next election.
I’m disgusted that the legislature would try and hold the PFD payout as hostage in order to get their special interests funded. Disgusting is what it is. It reminds me of an old roommate of mine who didn’t have enough money to pay her half of the rent, so instead of giving me what she had, she spent it on shopping for shoes/clothes (she had a closet full of stuff she never wore) and said she would catch up next payday.
As always Mr. Crawford, you reduce the current legislature to the hypocrites that they are. Thanks voicing the truth and keeping common sense flowing.
Very well said Jim. The government doesn’t get it they are stealing the money from the people. The people are being brainwashed that there is not enough money in the earnings reserve to give every Alaskan $3000 dividend.
Stop the bs and give the people there money.
$81 Billion sitting in the bank and these effing idiots in Juneau are in multiple extended sessions debating whether they should give the statutory dividends out with $500 checks, or use it to grow the state payroll? How did we decide to make these trashy people our leaders?
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Good piece, Jim.
Well said Jim. Not only the legislators must go, but their aides and advisors as well. No compromise. Enshrine the statutory formula, not a 50/50, in the State Constitution.
Thank you for your easy to understand analysis. Can you please run for House or Senate again? I think many people are starting to wake up out of the nightmare the leftists have created.
Jan, I submit that Jim Crawford is a guerrilla fighter and should stay put and do exactly what he is doing. His work educating and influencing from outside of Government is powerful. Jim’s work should inspire others to stand for office, creating a multiplier that would be lost if he was elected alone. We have at present a complete lack of leadership within Alaska, from the Gov. on down… We elect folks, who when in power prove to be feckless. Either because of their rigid ideology or lack of experience in the real world these folks soon become roadkill on the express lane of government. Such is the Republican Party today. Alaskans need to recruit and support candidates who have a wealth of business and people experience imbodied within their past. The levers of power currently are held by those who represent special interests, these special interests are in fact a minority. The group calling the shots are Weasels. Stop electing Weasels, labor to recruit good candidates and support them fully, simple enough. The good news is that Weasels are not inherently bright, we are and can act smarter at election time.
Nice work, Jim.
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Disagree on one point…
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Not sure how Alaskans will ever prosper if legislators are allowed to get out of the way.
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Kinda like termites or cancer, and arguably as useful, legislators “out of the way” is not a good thing, Alaskans definitely want to keep them in the spotlight.
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Why, you might ask?
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Our legislators’ arrogant condescension, blatant lawlessness, their contemptuous dismissal of productive Alaskans, their out-of-control spending, and the appearance of 421 special interests at the public trough seem collectively like symptoms of epic white-collar crime or racketeering.
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Majority of legislators appear distracted, like they’re on the hook to do or deliver something in which the average Alaskan and his Permanent Fund Dividend have no part. People with nothing to hide, no hidden agendas don’t act like this. Von Imhof’s tantrum is the latest example.
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So, one might argue, how can legislators be trusted to do something right “out of the way” when they clearly can’t be trusted to do anything right when they’re “in the way”?
Jim is right on as usual. The PFD has been designated as $525 of leftover funds taken from other legimate purposes designed to cause the largest outcast. Graduating Alaskans denied scholarship money, elderly Alaskans not getting needed funds and other agencies going without money. Just more political games to force a result the leadership wants! We know that some of the worst legislators are entrenched in Districts that will never vote them out of office. If the people want the PFD and change in Juneau we need to convene the Constitutional Convention and make the changes that neither the legislature or liberal courts can change or ignore. I believe the support of most Alaskans is there to do it. We need a group with the knowledge to carry this Convention to reality and stop the talk.
We could also correct the term limits, Abortion, length of Session, location of the legislature and per diem and pay limitations, and marriage issues. No more than two terms for any elected official including Alaska Federal, State, borough or or other elected body, no State funds to be expended on any Abortion except to save the life of the mother or child to be detrimental by a three member medical board with at least one member qualified in the speciality at risk. Legislature to convene first session in Fairbanks and second in Anchorage unless another location is designated by the Governor. Failure to comply with any Constitutional provision or to respond to the call of the Governor or legislature leadership results in loss of pay and per diem that the legislature can not change or overrule. Two violations by any member will result in the member removal from office and appointment by the representative party organization from the District of that member. Leaving a session or failure to show up for a session lawfully convened by the leadership or designated by the Governor at the time and place designated will result in immediate dismissal and appointment of a replacement as above. The only exception is upon hospitalization or death of an immediate family member or the elected official. Marriages in Alaska must consists of one biological human male and female. No gender determination other than biological is recognized by any governmental body in Alaska and can not be promoted or taught in any government educational or other institutions and bodies. State benefits are provided and recognized by any government body only to human biological males, females. The Pledge of Allegiance and a non-denominational prayer will begin every official government meeting and school day. No religious holiday or philosophy will be recognized, celebrated or taught in any educational or State government entity unless all major recognized religious philosophies are equally recognized.
I think I have touched on every issue my senior mind can remember in my over 50 years living in Alaska. It may get some of you thinking or discussing what could happen during a constitutional convention. It is also a warning to the current legislators that the above could happen if they don’t clean their own house we will!
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