Lincoln was right. Old Abe famously noted it was impossible to fool all of the people, all of the time,
Proof of Lincoln’s wisdom was evident recently when the Alaska Legislature took public testimony about deflecting funds from the Permanent Fund for government operations. The public was clear — protect the Permanent Fund and continue payment of their Permanent Fund Dividend.
The Permanent Fund belongs to every Alaskan, including future Alaskans. In order to protect the Permanent Fund, former Alaska Gov. Jay Hammond and other forward-looking politicians established the PFD to protect the fund from political raiding. Hammond knew the day would come when politicians would want to tap the Permanent Fund and believed the PFD was the best way to protect the fund and guarantee every Alaskan would equally share in the benefits of the fund.
Hammond was right.
Our current politicians have a spending problem. The political caste in Alaska has gotten hooked on spending in the last 35 years. They want to continue spending.
In the last three years, our elected state officials have blown through billions in savings to “balance” the budget. The savings are nearly gone. The budget gap this year is enormous. Naturally the pols are coming after funds from the Permanent Fund and to chop the PFD.
The current proposals floating around the Alaska Legislature to put a percentage of the Permanent Fund’s annual market value (POMV), into the hands of the political caste are poorly conceived for obvious reasons. The current discussions about how to set the POMV typically starts with deflecting an overly large percentage of funds from the Permanent Fund and then diverting too many of the deflected funds into the hands of the politicians and away from the direct control of individual Alaskans.
The public in Alaska knows this and roundly rejects this double damage to the Permanent Fund and the PFD.
In order to truly make the Permanent Fund permanent and continue Hammond’s PFD legacy, the Alaska Legislature needs to adopt a measure specifying a conservative POMV. not a speculative POMV, and then splitting this conservative percentage of earnings on a 50/50 basis.
Both of these elements — the POMV and the payment of the PFD — should be adopted by constitutional amendment. Anything less than permanent constitutional protection of the PFD in conjunction with a conservative value for the POMV will destroy the long-term prospects of the Permanent Fund and erode Alaska’s economic future.
In order to genuinely protect Alaska’s Permanent Fund, adoption of a conservative percentage of 4.025 for the POMV must be adopted. After deducting for administrative costs, this conservative percentage should be split equally between the politicians for public spending and the PFD.
Protection for the PFD and POMV must be reviewed and adopted by the public as a constitutional amendment in order to prevent future political maneuvering to grab a hunk of the fund or diminish the PFD.
Adopting a conservative POMV and protecting a reasonable PFD in Alaska’s Constitution will bring about a large measure of financial certainty pundits, pols and the people have been talking about for years. Credit rating agencies will applaud a POMV and PFD payout embedded in our Constitution. The politicians will have the assurance that a predictable stream of revenue from the protected Permanent Fund will be available for spending and get on with the difficult task of considering cuts, consolidation or whether other revenue measures are necessary. Best of all, Alaskans will know they will continue to receive a PFD each year — forever.
The PFD isn’t an “entitlement.” The PFD is the one and only way each and every Alaska is treated fairly and equally, regardless of where you live, income level or how you elect to spend or save your little slice of our communal savings account.
Our elected officials have spent billions and billions of our non-renewable mineral and oil wealth in the last four decades. We have spent too much and saved too little.
It’s time to permanently protect the funds we saved in our Permanent Fund and constitutionally protect every Alaskan’s PFD. A POMV set at 4.025 with 50/50 split in the Alaska Constitution would work. I believe Hammond would agree. So would most Alaskans.
• Joseph W. Geldhof is an attorney in Juneau.
