Opinion: The consequences of protecting and defending the PFD

Opinion: The consequences of protecting and defending the PFD

Great care must be taken as policy is debated and adopted.

  • Sunday, March 10, 2019 7:00am
  • Opinion

Alaskans voted to create the Alaska Permanent Fund in 1976, just 26 years into statehood when the population was just over 400,000. The people voted by a margin of 75,588 to 38,518 (66-34 percent) to create the Permanent Fund. In creating the Permanent Fund, Alaskans didn’t create the Permanent Fund Dividend (PFD), which happened in 1980 when the Legislature passed a bill establishing the first formula sharing Permanent Fund earnings with eligible Alaskans.

The original PFD formula was based on length of time in Alaska, $50 for each year of residency since statehood in 1959. The original $50 per year PFD formula was challenged by some people who were relatively new to Alaska, who thus would not have received as much money as those who had been here longer. In 1982, the U.S. Supreme Court ruled the original PFD formula violated the Privileges & Immunities Clause of the U.S. Constitution, guaranteeing citizens from each state roughly equal access to benefits afforded to other states’ residents, so all Americans are treated the same, preventing one state from treating other states’ residents like foreigners from other countries.

[Even with ‘super-sized’ PFD boost, economist predicts thousands of job losses under Dunleavy budget]

After the original PFD formula was struck down, the Legislature floated a different way to share Alaska’s oil wealth with individual Alaskans: equal $1,000 dividends for all Alaskans who had been residents for six months. This statutory scheme required a simple majority of the Legislature, not a two-thirds legislative vote followed by 50 percent of the full voting population.

In 1989, the Legislature expanded the amount of time needed to qualify as an Alaska resident from six to 24 months, and imposed a physical presence requirement and excluded felons from eligibility. A year later, a new court challenge found two years to be unconstitutional, and this led to the one-year residency standard that still exists today.

Far from being some static thing, the history of the PFD clearly illustrates that it is an evolving program, with specific policy elements changing over the course of time to meet the changing needs and desires of the Alaskan people. Throughout time, Alaskans have grown increasingly fond of the PFD’s generous payments which we can use as we see fit, with no strings attached. The Internal Revenue Service likes them as well, as PFDs are taxable federal income and a huge amount of money flows from Alaska into the federal treasury every year.

[130 testify on payback PFD, public gives more balanced feedback]

While the Permanent Fund originated in the desire to set aside some of Alaska’s oil wealth for future use, and the PFD from the wish to share wealth with all Alaskans, over time the PFD has come to resemble Universal Basic Income (UBI). UBI is defined as a government cash payment to citizens with no means test or work requirement. Generally made with few conditions, all citizens who can prove residency get the same UBI at regular intervals by meeting minimal eligibility requirements. There is no need to prove any need for the money or gainful employment, and if the age threshold is set low, children get the payments collected by parents or legal guardians on their behalf.

UBI is not a common or established government program, at least by that name. In 2013, citizens in Switzerland gathered signatures sufficient to hold a national vote on enshrining UBI in the Swiss Constitution. When voting happened in 2016, almost 77 percent of Swiss voters rejected this proposal. One of the reasons advanced by opponents was that UBI might serve as a magnet drawing people to move to Switzerland to sign up for and receive cash payments in perpetuity.

It is easy to understand the desire to protect and defend the Permanent Fund, and the PFD may have a role to play in this effort, but great care must be taken as policy is debated and adopted. At the national level, we’re trying to ensure America’s immigration laws and enforcement systems work. At the state level, it is not legally or practically possible to prevent domestic immigrants lured by the PFD to move to Alaska.

As Alaskans consider the best way to protect and defend the Permanent Fund and PFD, it is prudent not to paint ourselves into a corner where we’ve promised UBI without carefully considering the consequences.

• Benjamin Brown is a lifelong Alaskan, and an attorney, who lives in Juneau. My Turns and Letters to the Editor represent the view of the author, not the view of the Juneau Empire.

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