PFD keeps us focused

The Permanent Fund dividend has become like the mythical tail that wags the dog.

The fund itself was established in 1976 after our fearless leaders in state government blew through the $900 million from the 1969 oil lease sale in a flash of government spending. That spending spree was prompted by years of unmet public needs, but many of us thought they were doing too much too soon.

That 1969 sale was for drilling rights on just 451,000 acres of state land in the vicinity of Prudhoe Bay. And the state retained a royalty interest in the leases as well as the right to levy taxes, a combination that has brought billions of dollars into the treasury over the years.

The dividend was sold to we voters as a way to give each of us a vested interest in watching carefully the decisions made by the Permanent Fund managers and our legislators. It has indeed done that but perhaps too well.

These days many people see the dividend as the only reason for the Permanent Fund’s existence. But the primary purpose of the fund as I understood it was to generate money to pay the future cost of state government. And folks, some of that future has arrived and a lot is still over the horizon.

The public’s close attention to decisions made by the Alaska Legislature on the Permanent Fund relates almost entirely to the amount of that dividend. Nowadays many people want, and are actively campaigning for, enshrining the PFD in the state Constitution.

Leading the charge is Governor Mike Dunleavy, who is pushing what he calls the 50-50 plan. As I understand it that means half of the available draw from the Permanent Fund would go to cover the cost of state government and half to the dividend checks.

That is an attractive idea to many people since the dividend checks would be $2,350 this year and $2,500 next year. The problem is that writing checks that large for each of us would require slashing the cost of our government.

While that is an attractive thought to many of us, and it’s tempting to me, it is problematic. When you go in that direction you very shortly get to the point where you have to re-establish an income tax or impose a state sales tax. One or both of those would be necessary in order to provide essential state services. We would, in effect, be levying a tax in order to pay dividends.

Paying taxes out of our own pockets to provide money for individual dividends is a foolish notion. It is an unacceptable redistribution of income. And putting dividends in the Constitution would almost certainly result in unacceptable reductions in state services.

The dividend checks are a vital part of the income of many Alaskans, primarily those on the low-end of the economic scale. So it is extremely important that we don’t harm those folks too much by cutting the PFD.

It’s a delicate balance, obviously. And perhaps that is what would serve us best, both the current generations and those yet to come.

Let us try once again to strike that balance and stick with it. We owe it to ourselves, our families and all those future Alaskans.

Tom Brennan is an Anchorage columnist and author of six books. He was a reporter/columnist for The Anchorage Times and an editor and columnist at The Voice of The Times.