SPECTRUM: The Permanent Fund is working as it was designed to work

Wow, both the Alaska Dispatch News and Alaska Journal of Commerce’s articles quote Standard and Poor’s, as well as Moody’s, as saying Alaska needs to fix its fiscal imbalance. It is the governor and legislature who say we need to get more revenues in order to fix the imbalance (deficit spending).

In the opinion of several Alaskans and some legislators, as well as some 2018 candidates, cutting the budget would be a more proactive action toward a fiscal balance. In fact, both of the candidates who have filed for the Governor’s seat have that as their primary focus, cut the budget.

The truth is that the Constitutional Budget Reserve, Statutory Reserve and Permanent Fund (PF) Earnings Reserve are all liquid enough and available enough for those who have the will to use (not over-use) them. Even having spent more than $14 billion on deficits over the past three years, we still have about $14 billion in reserves. Additionally, each year the Earnings Reserve receives automatic infusions of cash based upon the PF's net income over 5 years.

The Governor's assertion that the Earnings Reserve would be gone in three years was based upon spending that $14 billion out of the Earnings Reserve. Fortunately, the tax-and-spend House Majority was not allowed to take that spend it all attitude to fruition with this year’s budget. The budget concurred upon by both houses reduced the major take from the Earnings Reserve in the original budget submitted by the Governor.

Reality Check: The PFD is not any part of revenues to the state. It is a portion of the PF's revenues. The state government is intended to be a pass-through for Shareholder Dividends. The dividends are neither state revenue nor a state expense. The state's Earnings Reserves stay in the Permanent Fund Corporation's management hands year-round, making more money than the Dept. of Revenue's CBR, until the Legislature appropriates from them.

It seems that it does not go without saying. There is no need to take the Permanent Fund Shareholder Dividend, or implement new taxes, or increase existing taxes fees and fines. The Permanent Fund is still working as it was designed to work (the other half of our dividends will remain in the Earnings Reserve until they are appropriated by the legislature) and continues to be an excellent long term fiscal plan.

Beth Fread is a Palmer resident.