Is it time to use the permanent fund to pay the bills?
Is it time to use the permanent fund to pay the bills? Lt. Gov. Byron Mallott thinks so, and told Alaskans on Monday, the day the state announced the largest Permanent Fund Dividend check in Alaska’s history.
“The purpose of the fund was to help meet Alaska’s fiscal needs, state revenue needs, when the rainy day occurred, when we needed to begin replacing non-renewable oil wealth with renewable financial wealth,” Mallott said. “That day is now.”
This is the toughest talk about touching the permanent fund Alaskans have heard yet. Drawing from the pot of money that hands out checks to residents is politically unpopular, but Gov. Bill Walker says since it’s the state’s largest resource, lawmakers have to consider it.
Alaska’s fiscal situation is so dire, a lawyer and an economist came up with a life-sized game show to jolt Alaskans into reality. At a conference on Alaska’s fiscal future this past weekend, Alaskans took their turn at balancing the scales. It was tough — $3.5 billion is a lot to wrap your head around.
What doesn’t help is this year’s record PFD: $2,072 to every Alaskan at a time when the state can’t pay the bills.
A recent survey found more than half of Alaskan voters would consider a statewide sales tax, tapping into extra permanent fund earnings and even capping the PFD to fix the budget shortfall.
“I think the intent of the PFD was to help the state and help the people. I don’t think a cap would be a great idea, but it’s definitely something to consider,” said Ben Gratrix Kontul.
“I think that a good compromise is to take some it, not all of it,” said Rielle Davis.
“I did not understand or recognize how large the permanent fund dividend would become,” said Cliff Groh.
Groh was the principal legislative assistant back in 1982, when the PFD was created. He says founders intended for the PFD to last as long as the permanent fund generated earnings, and the fund itself is a savings account for the future.
“There is not a good answer in the historic record, a legally definitive answer, as to what the purpose of the savings is for,” he said.
Which begs the question, when do you dip into that savings?
“Is this the rainy day?” he asked. “I’m thinking that we face very tough times, and it’s a difficult situation.”
Groh also says the PFD wasn’t intended to be capped, because the dividend gave all Alaskans an incentive to grow the permanent fund.
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