SPECTRUM: SB26, Diapering the Devils in the Details

The 2018 legislative session ended with many of us breathing a sigh of relief through clenched teeth; thankful the House Majority and Governor Walker were unable to saddle hard-working Alaskans with new taxes, but incredibly frustrated. Once again, despite the fact that there is 18 billion dollars in the permanent fund earnings reserve account, the legislature failed to pay the traditional 50/50 PFD. Three years in a row, our “leaders” have failed to give the private sector the economic stimulus it needs during this recession.

Let’s review. In 2016, Governor Walker took 1,100 dollars from each Alaskan with his veto pen. Doubling down in 2017, a majority of the legislature voted to take another 1,300 dollars. This October will see Alaskan families take a third financial gut punch. The legislature arbitrarily determined that every Alaskan will get 1,100 dollars less than they should. The amount of money taken from Alaskan families and the private sector is staggering.

What’s really disturbing are the philosophical inconsistencies of those who are taking nearly 20,000 dollars from the average Alaskan household. Republicans who claim that they want small, limited government, but then vote to take money from small businesses and out of the private sector for government largess. Democrats and Independents who claim to be “champions of the poor,” but continue to push the button for a de facto regressive income tax.

Alaskans have called, emailed, and testified with very little response from their elected representatives. Instead, like those former Governor Jay Hammond warned about in his book Diapering the Devil; our politicians use the oil wealth we hold in common to curry favor and grow government. Hammond’s hope as “Father of the PFD” was to limit the amount of wealth that politicians could waste. However, Governor Walker and most who represent us in Juneau are bursting out of their Pampers.

As a further insult to constituents, many legislators also voted for SB26. This new law allows the legislature to spend a percentage of the overall value of the fund – a POMV, or percent of market value. While celebrated by some as a way to protect the Permanent Fund and future dividends, there is absolutely nothing in this law that guarantees any protection.

Alaskans are intelligent people. We know how to read and analyze legislation, and we have discovered that SB26 is deceptive and terribly flawed. A POMV draw would create a more predictable amount of money available for dividends and government spending. However, SB26 isn’t a true POMV because it only draws from the permanent fund earnings reserve account, not the value of both the principle and earnings. SB26 is just a statute. And based on how Walker and the legislature have abused the traditional PFD statute, many of us are more than skeptical.

To create a real POMV, we would need to amend the constitution; something that legislative leadership and Governor Walker know will never happen with their proposed split of 70% for government and 30% for dividends. As one member of Senate leadership put it, “The people will just vote with their pocket books.” He obviously needs a new diaper.

The truth is that SB26 doesn’t guarantee a dividend at all. The law changes the PFD language from, “…the legislature shall…” to “… the legislature may…” pay a dividend. Additionally, SB26 does not force us to have real conversations about the proper size of government or to identify its essential functions. It only creates a new source of revenue for our legislators to tap. Forget diapers, SB26 allows the legislature to go commando!

At the unsustainable rate Governor Walker and our legislature continue to spend, the PFD will soon be swallowed up by their insatiable appetite. Sadly, with SB26, our leaders have defied the will of most Alaskans. They’ve also weakened the safeguards established to protect the Permanent Fund and Hammond’s vision of using the PFD to control government spending. Clearly, we must get active in campaigns and elect new people to represent us. Never has the following quote been more clear, “Politicians are like diapers: they should both be changed often and for the same reason.”

Todd Smoldon has taught high school economics for 20 years, resides in Willow, and has lived in Alaska for 31 years.