OPINION: Go big or go home
That was the title of an opinion piece published in this space on June 8, 2016, as the debate raged over the first legislation that would have authorized use of Permanent Fund earnings and set the dividend at $1,000 or some other amount for a period of three years as the state was facing multi-billion deficits.
A subsequent column suggested former Gov. Bill Walker veto half the dividend appropriation — which he eventually did — as a piece of leverage with the House to encourage its members to approve the Senate bill that had passed 14-5.
A year later I declared that “the PFD is not a suicide pact” as a divided Legislature remained at an impasse over using Fund earnings before settling once again for filling the deficit with savings from the Constitutional Budget Reserve.
At the same time it has been argued here that the PFD should not stand as the first priority of all state spending — I’m of the “Alaska Inc.” perspective in that the dividend should reflect the state’s fiscal health like any other business — I’ve also consistently urged the Legislature to stop the ad hoc dividend setting and reconcile the conflicting statutes between using Fund earnings and the PFD formula.
The point of this rambling preamble down memory lane is to provide context for anyone who may assume that because I approach issues from the conservative side of the spectrum I must have always favored paying out a full dividend or that I believe we can cut our way out of budget deficits.
The time is now to go big.
As a natural resource state, Alaska has endured boom-and-bust cycles from industry to industry over its history, but we are a long way from the oil price crash in 2016 and nearly a year into a once-in-a-century economic disruption brought on by the COVID-19 pandemic.
Despite recovering oil prices and several promising advanced projects, the North Slope is under attack from a malevolent federal government, the courts and anti-development NGOs.
The tourism industry is staring at a wipeout after several record-setting years thanks to Canadian COVID-19 precautions and a 19th Century protectionist U.S. law that puts our visitor economy under effective control by our neighbors to the east and south.
Fisheries face uncertain markets both domestically and overseas and must also cover millions in extra costs for COVID-19 mitigation that as we’ve seen can still not be enough to prevent outbreaks and production interruptions.
Construction spending is forecast to be off by one-third this year over 2020 as the private sector hunkers down. Public sector construction spending is typically about a third of spending in a year; this year it is projected to account for half.
About the only industry that has been held harmless over the past year are the metal miners who are all expanding in response to demand brought on by inflation expectations tied to trillions in federal deficit spending that shows no signs of slowing down.
In short, Alaska is enduring a hurricane followed by a monsoon followed by a tsunami and the conventional wisdom as it relates to our supposed “rainy day” fund is that it can only open its umbrella to cover the state budget and government payroll that has shed almost nothing in the past year.
Tens of thousands of others have lost their jobs. The state population has declined for four years in a row. The birth rate is down. K-12 enrollment is ebbing. Graduating high school students who shun the state universities for opportunities elsewhere are unlikely to ever return.
We are not simply moving through a predictable economic cycle. We are suffering generational brain drain on a scale unlike any other time in state history.
The most common refrain for not exceeding the statutory percent of market value, or POMV, draw is that we must protect the Fund and the dividend for future generations, but what kind of state will actually be left to enjoy if we do nothing to arrest the current trajectory?
What good is a $100 billion Permanent Fund if we have a hollowed out education system as families flee, devastated coastal communities of shuttered small businesses and a managed decline on the North Slope while work dries up for Alaska-based support companies?
Let us not forget that the reason the Permanent Fund has reached the unprecedented value of nearly $75 billion is because of the largest wealth transfer in the history of mankind from the working class and small business owners to the top percent of billionaire oligarchs and white collar work-from-homers who have seen their 401(k) accounts soar.
For that the Fund managers deserve credit, and previous years’ well-founded austerity in dividend setting gave them more resources to work with that have generated these massive returns.
Alaska cannot control the federal government, Canada or the 9th Circuit Court of Appeals. But it can control something that is the envy of 49 other states: the ability to provide direct relief to its residents.
Combined with a revised PFD formula and his plan to boost the construction sector by getting to work on our billion-dollar backlog of deferred maintenance using a manageable amount of debt, Gov. Mike Dunleavy’s pitch for a significant increase in dividends is an idea whose time has come.
The message is simple for a Legislature that still, inexplicably, is showing no sense of urgency:
Go big or go home.
Andrew Jensen can be reached at [email protected].