You can hug something to death, you know.
Alaskans are about to learn that lesson.
On Friday, the House Finance Committee voted 5-6 against moving Senate Bill 128 out of committee and on to the floor for a vote of the full House.
[House kills Permanent Fund plan]
SB 128 is the cornerstone of any fix to Alaska’s multibillion-dollar deficit. It takes an annual 5.25 percent draw from the Permanent Fund to pay for state services and the Alaska Permanent Fund Dividend.
It won’t solve the whole deficit, but it’ll fix between half and two-thirds of the problem.
It’s a sane, sensible approach, and it failed.
The problem wasn’t the lawmakers casting the vote, which failed in a bipartisan way. The problem was with we, the people.
You see, SB 128 will cut the Alaska Permanent Fund Dividend as a side effect of its budget-cutting goal. This year, the dividend is expected to be $2,000. The version of SB 128 being considered by the finance committee would have lowered that to $1,500.
The PFD has long been considered the third rail of Alaska politics. Touch it and die.
In the weeks before Friday’s vote, lawmakers have received a tsunami of emails and phone calls from Alaskans urging them to vote no. On Tuesday night, when the committee heard public testimony, three-fifths of the callers asked lawmakers to vote no.
Alaskans love the dividend, and that love has been on display this session. On Friday, that love for the PFD led six lawmakers to vote “no.”
That love may now mean the PFD’s death.
You see, the state’s savings are running out rapidly. The “no” vote on SB 128 means the state will spend nearly $4 billion from its Constitutional Budget Reserve, which serves as Alaska’s savings account.
By this time next year, there will be barely more than $3 billion in that reserve. We will not have enough money to pay for things like schools, troopers or health care.
Fortunately, there’s another savings account. That’s the earnings reserve of the Alaska Permanent Fund. The only catch? It’s the same savings account that pays the dividend.
If our spending continues at present rates, the dividend will collapse by 2020. By voting “no” on SB 128, lawmakers are encouraging an end to the Permanent Fund Dividend. By refusing to cut the dividend and insure its long-term health, we are encouraging its short-term death.
Worse yet, the failure to act this year means Alaskans will suffer. Next year, we can expect further budget cuts. On Friday, Rep. Tammie Wilson, R-North Pole, promised that next year the Legislature will look at formula-funded programs for budget cuts.
That means cuts to schools, to health care, to state employee pay — all of which are funded under various formulae.
Without a long-term fix for the deficit, we will lose services that all of us rely upon. Barring a rise in oil prices, we are doing nothing but delaying judgment day.
The fiscal cliff still awaits us, and we are still running headlong toward the edge.
We love the PFD, but our refusal to accept a small cut in our annual gift will cost us dearly.
We aren’t just hugging the PFD, we’re hugging a knife. And it’s gutting us.
