What others say: Enshrining PFD in constitution is unwise

  • By Fairbanks Daily News-Miner Editorial
  • Thursday, March 29, 2018 10:46am
  • Opinion

The Alaska Permanent Fund Dividend is not an entitlement. Nor should it become one.

Yet that is what several unwise but populist proposals in the Alaska Legislature seek to make it by asking voters to add the dividend program to the Alaska Constitution.

A few such proposals exist in each chamber of the current Legislature, but only one has made any progress. Senate Joint Resolution 1, introduced in January 2017 by Sen. Bill Wielechowski, D-Anchorage, cleared one committee last year but, fortunately, was blocked by the Senate Judiciary Committee on March 7.

And there it should be allowed to die. Alaska would be well served if such a fate could befall all such efforts to guarantee the annual dividend.

Why?

Because guaranteeing the dividend program may at some point actually harm the state.

There’s an argument to be made that distributing a dividend in dire financial times when the state has more-pressing needs would run afoul of the spirit — if not legally so — of the constitution’s requirement that the state’s natural resources, from where dividend dollars are derived, be used for the greatest benefit possible of Alaska and Alaskans.

The Alaska Constitution, in Article VIII, Sections 2, states the following:

“The Legislature shall provide for the utilization, development and conservation of all natural resources belonging to the state, including land and waters, for the maximum benefit of its people.”

The dollars that go into the dividend program come indirectly from the development of those natural resources. Revenue from resource development goes into the Alaska Permanent Fund principal, which is invested in various ways.

The earnings from those investments are allocated each year by a statutory formula and are intended for the dividend program, though the Legislature has the authority to spend the money in any manner it wishes. It could cancel the dividend program entirely, without a vote of the people, if it wanted to.

Senate Joint Resolution 1 would put into the Constitution a formula guaranteeing an annual dividend; it would not guarantee a dollar amount. It would also allow some of the earnings to be available for other government functions.

The annual dividend, regardless of its amount, is surely seen by each individual recipient as being the best use — the “maximum benefit,” in the constitution’s own words — of the permanent fund’s investment earnings. And businesses may see it that way also, because dividends are used to pay bills and to buy goods and services. Businesses often have special deals to encourage those dividend dollars to be put toward the purchase of big-ticket items such as snowmachines or ATVs.

But look at it another way, especially through the final seven words of Article VIII, Section 2. It reads, “… for the maximum benefit of its people.”

That could very well mean Alaska’s people as a whole.

It may someday be more important for the maximum benefit of the people as a whole to have earnings from the permanent fund spent almost entirely or in full on something other than a dividend. Maybe on schools. Maybe on the state’s transportation system. Money has been in increasingly short supply in recent years, as Alaskans should well know by now.

That means that the Legislature should retain authority over the issuance — and, potentially, nonissuance — of the dividend.

There’s another argument against putting the dividend in the Constitution.

Making the dividend a guaranteed annual affair further isolates Alaskans from the operations of government. Alaskans pay no sales or income tax and get paid, through the dividend, for simply being here. As enviable as that situation might be, it also means Alaskans might not be as invested in, and as interested in, their state government as they should be.

Alaskans should be left to continue thinking the dividend isn’t a sure thing. They’ll pay closer attention to their government and their elected officials as a result.

Enshrining the dividend program in the constitution surely seems an attractive, vote-getting idea for many people, but it is an unwise action when Alaska faces an uncertain fiscal future.

Discussion about putting the dividend in the Alaska Constitution does, however, provide an opportunity to remind Alaskans that it was the Legislature that created the dividend program. It was not, as some think, created when voters established the permanent fund itself through a constitutional amendment in 1976. The Legislature established the present dividend program — an earlier one was ruled unconstitutional — in statute in 1982.

The Legislature is the branch of government with the greatest control of revenue and expenses, and it should retain such control when it comes to the Alaska Permanent Fund Dividend rather than succumb to the clearly populist idea of asking voters to make it a part of the Alaska Constitution.

Putting the dividend in the constitution would erode the Legislature’s necessary flexibility as it works with the governor, whoever that may be in the years ahead, to put Alaska back on a stable financial footing.

— Fairbanks Daily News-Miner, March 25

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