For a long time, significant issues about our Permanent Fund have been bungled and avoided. How long?
Too long, since 2016, when then Gov. Walker decided to ignore the long-standing formula to pay the dividend embedded in Alaska law.
The failure to pay the dividend according to statute 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 hard choices is unacceptable. The financial well-being of Alaska is deteriorating because of the inaction by our elected officials.
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.
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.
Without a dividend, individual Alaskans are without a stake in their savings account and the fund will quickly become less than permanent. As Gov. Jay Hammond once warned: “As go the dividends, so goes the Permanent Fund.”
Instead of acting decisively on the dividend, many politicians have avoided tough choices. Now, with oil prices elevated and federal funding flowing into the state’s treasury, many politicians seem content to avoid dealing with the citizen’s dividend and putting our fiscal house in order.
We need action now. But we need to act responsibly.
Current proposals to use the Percentage of Market Value (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 over 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 special interests are salivating at the prospect of investing the Permanent Fund in pet projects that are not 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.
That’s why we call on Alaskans to demand that the dividend formula be fixed 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. Visit www.pfdak.com for more information.
