Changing PFD formula wrong, short-sighted
With the special session going on there have been bills introduced to pay a full PFD and then halve it for the future. This is incredibly short-sighted and shows little economic sense.
It’s wrong AND unnecessary to change the formula to decrease the PFD. The money is covered every year by a portion of the realized earnings from the permanent fund, leaving an equivalent amount for government to spend. The three years of cutting the PFD took $3.2 billion of economic effect (using ISER’s 1.4 multiplier versus government spending) OUT of the economy in a recession. It’s wrong to think the government is better at spending money than people are.
What has been clearly shown to the Legislature and all who have studied the budget is that if you only use the PFD to fund the deficit you won’t have a PFD in two years. If you throw savings in you get to about 2039. If you throw taxes in you just get a few years more. It’s IMPOSSIBLE to balance the budget long-term, i.e. have a sustainable budget, without cutting the budget. The reason for this is that the budget has natural increases with inflation, labor increases and regulatory increases so those increases outpace the revenue that a small state like Alaska can generate. However, every time you cut the budget, it doesn’t just cut this year, but it also cuts all those increases going forward.
This is why the only solution to get to a sustainable budget is to make cuts to a level that can be sustained by a state our size. We already have billions ($3.2 billion this year) that come from oil, and a billion that comes from our investment income, the permanent fund, after paying a full PFD. Alaska needs to work for a sustainable budget and not a quick fix that will just end up killing the PFD and the hopes and dreams of many Alaskans, as government grows unchecked. Please urge your legislators to use real economic thinking, not just a short-term fix by grabbing the PFD, which as I’ve shown doesn’t solve any problems.
— Lance Roberts, Fairbanks
