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Should PFD be enshrined in the Alaska Constitution?

FAIRBANKS — What was the reason for the Alaska Permanent Fund anyway? Is our permanent fund dividend a constitutional right? Should it be? Is it yours? The state government’s? Or ours? Who does the permanent fund belong to? Should permanent fund earnings only be used to pay a dividend?

We need to answer these questions this year.

Established by a vote of the people in 1976, the permanent fund came into being. Our permanent fund is in the Alaska Constitution. Please read it — Article 9 Sec. 15. After describing the principal, the last sentence says: “All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law.” The support statement in the 1976 election pamphlet for the permanent fund amendment to our constitution read in part: “Now is the time to ask ourselves the question: ‘When the oil and gas is depleted, where will the funds to feed our giant government come from?’ The answer is: ‘the permanent fund.’”

That is the answer to the reason for the permanent fund. The permanent fund dividend is a statutory entitlement in Title 43 under Revenue and Taxation, passed by the Legislature in 1981 and reworked by the Zobel vs. Williams Supreme Court Case in 1982. The entitlement was created by the Legislature. It can be changed by the Legislature and has been many times throughout the years.

Therefore, the dividend is not a constitutional right but a statutory entitlement created by the Legislature to share our resource wealth evenly and for every qualified Alaskan. Should the dividend now be enshrined in the constitution? Not in my view. Should we elevate the right to a cash payment from our sovereign wealth to the same level as our freedom of speech or the right to keep and bear arms? I think that would be a huge mistake.

Truly, Alaska’s vast resources are held in common, so also is our government. We all get to share in the wealth and responsibilities of governance. In our statehood compact, we agreed with the federal government that our resources, land and water, would be held in common to pay for a government that Alaska’s small population could not sustain through individual taxation. Therefore, our resources and our government — public safety, schools, land management, game management, etc. — are in common as well. We enjoy great benefits and shoulder significant responsibilities.

Yours? The state’s? Or ours? Too many times we put a distinction between us and government, and for good reason. Sometimes our government is growing, uncontrollable and overbearing, a want-to-be master rather than a responsive, lean servant to the people. Yet the government of Alaska is still ours. It is, “we,” not “us and them.” Debate is important, and it is in full swing over our dividend, so please accept this opinion in honest debate.

Should the earnings of the permanent fund be used only ever for a dividend? Not in my opinion. We would then have a serious IRS problem on our hands because the fund would be a private use only fund and potentially lose its tax-exempt status. I think sharing the wealth of our permanent fund earnings is a good thing. I also think using earnings to fund our government services is a good thing.

This is a critical year for us Alaskans. Oil income has been and remains low, and our savings are not able to sustain us any longer. We need to figure out the wisest way to use the earnings of the permanent fund to keep our government funded along with our oil wealth and the other taxes that are available.

Putting the statutory formula for paying a dividend into our constitution — by approving Senate Joint Resolution 1 — won’t work because the dividend would overrule all other uses; just using the earning reserves has an impact on the dividend every time. A better formulation is needed, one that is clear and simple to calculate. The governor vetoing the dividend before the statutes were changed was a huge violation to us Alaskans in policy and process, which disappointed me.

I favor an endowment approach that puts the corpus (constitutional permanent fund) and the earnings reserve (statutory earnings not yet obligated) into a management fund together that provides only 4-5 percent of the entire value available for us to use for dividends and government.

We should not accept the rewriting of history to make political points. Rather, we should roll up our sleeves and work for the best solutions for now and the next generations. Therefore, I am in favor of putting an endowment method into our constitution and having a statutory directive for general funds to our budget and paying a dividend.

Sen. John Coghill is a Republican from North Pole representing District B. 


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