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News-Miner Editorial

Alaska can’t afford a big PFD: Legislators must have courage to reject a big payout

News-Miner opinion: Alaska just can’t responsibly afford a 2019 Alaska Permanent Fund dividend of $3,000, as proposed by the state Senate.

So it also stands to reason that Alaska can’t afford an even larger one, as Gov. Mike Dunleavy has proposed, to begin restoring the dividends that were reduced in each of the past three years.

It’s that simple.

Paying a dividend of $3,000 or more would be like the head of a household deciding the family should go on a pricey holiday instead of buying heating oil or getting the roof repaired.

It’s not responsible.

Would we all like to have a dividend of $3,000 or more? You bet.

Do we all wish the permanent fund dividends of the past three years hadn’t been reduced? Certainly.

Do we all wish our state didn’t have budget shortfalls those years that former Gov. Bill Walker and the Legislature reduced the dividend to help fill the money hole? Probably all of us wish that.

But we had those deficits and are looking at another one — of about $1.6 billion — for the fiscal year that starts July 1. You can blame an over-reliance on volatile oil revenue for that. The price of oil has tumbled sharply in recent years, and production hasn’t increased nearly enough to offset that revenue loss.

So here we are once again, faced with a massive deficit and the continuing necessity of providing services at a level that most Alaskans would consider acceptable.

Faced with that, and with Gov. Dunleavy’s insistence on not implementing a statewide tax to help close the budget gap, it makes no sense to give out a dividend of $3,000 or more. Many residents, shuddering at the depth of the budget cuts proposed by the governor, have testified at town halls and committee hearings that they favor a reduced dividend and even a statewide tax as a way to close the budget gap.

But that sentiment doesn’t seem to have gained much traction in the Legislature. That’s because too many legislators lack the strength to do what needs to be done. They fear being tossed out of office in a primary election by a challenger who blindly bleats the “He (or she) raided the permanent fund!” cry that seems to surface every two years at election time.

Debate about the size of this year’s dividend will soon reach a crescendo. The Senate has approved a fiscal 2020 state budget with a $3,000 dividend, which will cost about $1.9 billion. That budget has a $1.2 billion deficit, however; the House has approved a budget without a dividend.

And the governor? He wants the state to pay out a $3,000 dividend this year and to start making whole the dividends from 2016, 2017 and 2018. Those who received the 2016 dividend would therefore receive, under separate legislation requested by the governor, an additional $1,061 in their 2019 dividend — at an additional cost of $565 million. Payments from the short dividends of 2017 and 2018 would be paid in 2020 and 2021.

The governor views the dividend as a transfer of the state’s wealth to its residents and something not to be considered when considering the state’s budget. It’s a reasonable position; unfortunately, Alaska cannot afford that view now.

A dividend of $1,200 would, according to reports, allow for a balanced budget while avoiding the severe cuts the governor has proposed. That is something Alaska can afford. And let’s remember that Alaska is the only state without a statewide sales or income tax. 

Alaskans will know their 2019 dividend amount in the remaining few weeks before the new fiscal year starts. And they will also know whether they are being forced to pocket that money at the expense of deep budget cuts to the University of Alaska, the state ferry system and many other programs and services.

Let’s hope the current Legislature has the courage to do what its most recent predecessors did in trying to deal with state budget deficits. That means not succumbing to the desire to pay out a big dividend when Alaska has a big budget deficit.

The Daily News-Miner encourages residents to make themselves heard through the Opinion pages. Readers' letters and columns also appear online at newsminer.com. Contact the editor with questions at letters@newsminer.com or call 459-7574.

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Guidelines

The Daily News-Miner encourages residents to make themselves heard through the Opinion pages. Readers' letters and columns also appear online at newsminer.com. Contact the editor with questions at letters@newsminer.com or call 459-7574.

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