Walker, Mallott deceptive on Permanent Fund earnings changes

By TUCKERMAN BABCOCK
CHAIRMAN, ALASKA Republican Party

A more deceptive article could hardly be written than Gov. Bill Walker and Lt. Gov. Byron Mallott’s recent op-ed in the Anchorage Daily News on Permanent Fund earnings changes.

Gov. Walker and Lt. Gov. Mallott are experienced politicians who seem to be doing their level best to argue “blue is red” and “night is day.”

A prime example: They say the “biggest risks to the fund would be ad hoc withdrawals, and the temptation to let short-term political priorities overwhelm concerns for the fund’s long-term health.”

They ought to know.

It was Gov. Walker who was the first ever to arbitrarily veto part of the Permanent Fund dividend, deciding all by himself what Alaskans’s dividend amount would be. He didn’t have a plan to do anything with the sum he vetoed; he just let the money sit in the earnings reserve of the Alaska Permanent Fund.

That is the definition of an “ad hoc” approach.

During the next two years, he pushed for arbitrary cuts to the traditional dividend formulation. We all witnessed first this number and then that number being debated willy-nilly, as if picked from a hat. All in all, his “ad hoc” vetoes and cuts to the dividend cost each Alaskan — every man, woman and child — about $3,375.

A second example: Gov. Walker and Lt. Gov. Mallott claim they have to cut your dividend to save it. Really.
Where does your dividend come from? There are two pots of money. One is designed to be completely off limits to a grasping governor: the constitutionally protected principal of the Permanent Fund.

The other pot of permanent fund money is the earnings reserve account. This account includes all the realized earnings of the constitutionally protected principal of the permanent fund and the earnings from funds in the earnings reserve account managed by the Alaska Permanent Fund Corporation.

The dividend is traditionally calculated by law — no funny business allowed, no “ad hoc” PFDs.
The money available for the PFD was determined by a formula in law. Half that amount is set aside for our PFDs, and half for government spending or saving.

There is no threat to perpetual funding of the dividend under the traditional law. Money to pay the dividend is always available because it comes directly from the earnings of the constitutionally protected principal of the Permanent Fund.

There is one exception, one real threat to the PFD: The governor and the Legislature have the appropriation power to take some, most or all of the fund earnings and spend them on more government.

The governor and his running mate use hyper-political misdirection as they describe themselves as “not career politicians” and just a “carpenter” and a “fisherman.” Truth matters, and that is less than the truth. Both men have a very long public policy resumes, as most career politicians do.

Both men are multi-millionaires. Their primary careers are as a lawyer and as a CEO of a large corporation. Someone should tell their very young political operative, John-Henry Heckendorn, that we are a small state and we know each other fairly well. Peddling political jargon that may sound good in a focus group actually sounds hollow and fake in the real world.

I do not in any way mean to denigrate the accomplishments or success of Bill Walker as a carpenter (or as millionaire lawyer), nor do I criticize Byron Mallott for his experience as a fisherman (or as CEO of a large and powerful corporation). I do criticize them for letting their political handler try to paint a false political picture of who they really are. They are cagey and sharp politicians who have finally managed to get their hands on some of the money that previously – by law and tradition – had been dedicated to the owners of the oil and gas resource on state land: individual Alaskans.

Politicians have always had access to half the earnings from the Permanent Fund accounts, but apparently having half of the Permanent Fund earnings was not enough. They wanted more, and now they have it.

And what happened to the state budget the very first year Gov. Walker and Lt. Gov. Byron Mallott could spend some of the dividend on government?

Did they reduce spending? Did they finally balance the budget?

Not at all. They increased – yes, increased – state spending. They just cannot help themselves.

We know where Gov. Walker and Lt. Gov. Mallott stand. Where does the Alaska Republican Party stand?

We are open to new ideas. We are not necessarily opposed to restructuring the use of the earnings for the Permanent Fund. New ideas are not all bad. There are many options for protecting the dividend and for funding government from existing resources (no new taxes) and many opportunities to decrease (not increase) state spending. We support the dialogue and examination of new ways of managing the earnings of the permanent fund, such as a percent-of-market-value approach.

But when it comes to changes to how we manage the earnings of the Permanent Fund, the Alaska Republican Party believes no change can long survive without, at a minimum, an advisory vote of the people.

Changes not subject to a vote of the people will never be part of a stable, long-term fiscal solution. Top-down changes will remain a political football pitting Alaskans against Alaskans while at the same time providing a terrible distraction from the many other issues facing Alaska.

Unless the people are on board, the foundation of any changes to the dividend are built on sand.

Tuckerman Babcock is chairman of the Alaska Republican Party.