Empire Editorial: Dunleavy’s bill will sink PFDs

  • Sunday, October 9, 2016 1:01am
  • Opinion

If you haven’t spent your Permanent Fund Dividend yet, hold it close and tight. It may be be one of the last, and largest, you will ever get.

Wasilla Republican Sen. Mike Dunleavy held a news conference in front of a Fred Meyer store on Wednesday, touting his plans for legislation to restore the $700 million in PFD funds vetoed by Gov. Bill Walker.

We hope his bill sees the quick death it deserves.

Dunleavy’s stunt is nothing more than a gimmick to raise interest ahead of a possible run for governor in 2018. It’s a wise move in that regard, pandering to a population of Alaskans who prefer we remain a welfare state.

Our state is suffering from something far greater than billion-dollar budget deficits. It seems political ineptitude and constituent greed are our true enemies, not low oil prices.

We’ve defended Walker’s veto before, but we’ll put it in simpler terms:

1. Alaska has a $4 billion budget deficit.

2. Alaska has $3.2 billion in the Constitutional Budget Reserve.

3. Alaska’s unrestricted general fund revenue is $1.2 billion (it was $7.5 billion in 2014).

4. When the Constitutional Budget Reserve runs out in summer 2018, we’ll have to spend from the Permanent Fund Earnings Reserve.

5. The Earnings Reserve is the same account used to pay PFDs.

No matter how you do the math, all of us are in big trouble.

There’s no evidence to suggest a sudden and drastic spike in oil prices will save us. Sure, it’s possible, but not probable. When Fiscal Year 2019 rolls around, we’ll have three options:

1. Tax ourselves at Connecticut levels.

2. Cut state services and jobs into oblivion.

3. Borrow from the fund that pays dividends.

Gov. Walker is anticipating the third option, which is why he halved our PFD checks this year. It’s only a matter of time until the fund that pays PFDs begins paying for state operations. When that happens, checks will be whittled year by year until nothing is left. When the Fund’s earnings reserve is gone, the only piggy bank left is the constitutionally protected Permanent Fund itself. Walker’s veto bought us more time to get state finances in order.

“Let’s agree that we’re going to have to reduce government and come up with a number first,” Dunleavy said Wednesday. “We can’t even right now agree on a number, a size of reduction.”

A year ago, Alaskans and lawmakers had a say in the size of government. Not so much anymore. The options now are to cut a lot, or a whole lot. Or the state can tax a lot, or a whole lot. In truth, it will probably be a lot of both.

We’d have preferred the real options on the table last January, but legislators turned down those options. Now we must decide how quickly the ship will sink, and stealing an extra $1,000 today will only speed an unpleasant end.

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