As the legislature considers restructuring the Permanent Fund and using some of the earnings reserves to pay for state government it is important for Alaskans to focus on some of the basics.
In 1976 a law establishing the Permanent Fund was created. The stated purpose of the fund was to:
- Provide a means of conserving a portion of the state’s revenue from mineral resources to benefit all generations of Alaskans.
- Maintain safety of principal while maximizing total return.
- Be a savings device managed to allow maximum use of disposable income for purposes designated by law.
Last week, the Senate passed SB 128, their version of the Governor’s Permanent Fund Protection Act, which would restructure the Permanent Fund to:
- Continue the annual dividend program ($1,000 for first three years);
- Manage all state savings accounts through Permanent Fund Corporation to increase returns;
- Provide revenue to fund state government.
The Senate version of SB 128 DOES NOT:
- Affect the $2,000 per person PFD that is in the FY 17 operating budget;
- Reduce the draw from the Constitutional Budget Reserve for FY 17;
- Use Permanent Fund earnings to fund government in FY 17.
The House is now debating the bill, and has expressed the following concerns:
- SB 128 was passed before meaningful reductions were made to the state budget;
- SB 128 has not been modeled to show that it provides a more stable fiscal future;
- SB 128 makes the PFD the highest priority of government spending instead of paying for essential public services.
Alaskans have repeatedly, via polls, indicated they want the state to significantly reduce the size and scope of government. Yesterday, the Alliance conducted an informal poll on their Facebook page with the following results:
- 73% of respondents did not believe the budget had been cut enough;
- 55% of respondents supported using earnings reserves from the Permanent Fund to pay for state government;
- 42% did not support using the earnings reserve to pay for state government.
Many Alaskans are asking “why now?” The response to that question from the Senate, the Governor and some business leaders has been, if we do nothing:
- Our savings accounts will be depleted in five years;
- PFD checks will decline and be eliminated within five years;
- A significant tax burden will be imposed on Alaskans;
- Critical state services will decline.
The chicken or the egg? Cut state spending significantly before restructuring the Permanent Fund or restructure the PF and hope that state spending will be reduced?