The column was in response to an op-ed in the Alaska Dispatch News by Charles Wohlforth which, on the surface, appeared to champion an amendment to include the PFD in the constitution, but in the fine print turned out to be a proposal to lock in a proposal to cut and cap the PFD at less than half the current statutory level.
We were reminded of that piece while reading another ADN op-ed this morning, this time by Alaska House Majority Coalition leadership members Reps. LeDoux and Tuck. "Alaskans have a right to the PFD. Let’s write it in stone.," https://goo.gl/Bq6ztd
Like the previous Wohlforth piece, the LeDoux/Tuck piece sounds good at first blush to those concerned about the overall Alaska economy and Alaska families.
We were reminded of that piece while reading another ADN op-ed this morning, this time by Alaska House Majority Coalition leadership members Reps. LeDoux and Tuck. "Alaskans have a right to the PFD. Let’s write it in stone.," https://goo.gl/Bq6ztd
Like the previous Wohlforth piece, the LeDoux/Tuck piece sounds good at first blush to those concerned about the overall Alaska economy and Alaska families.
But also like the Wohlforth piece, upon closer inspection the reader realizes they are talking about enshrining the PFD in the constitution ONLY AFTER first cutting and capping it at levels significantly below those envisioned by Governor Hammond.
LeDoux & Tuck deserve credit for doing a better job at obfuscating their intention than Wohlforth. In his piece, Wohlforth came out and said:
But reading the full column it becomes clear that what Reps. LeDoux & Tuck have in mind is including in the Constitution a PFD calculated along the lines of that included in the Alaska House Majority Coalition fiscal plan introduced last session.
That plan first resets the annual draw from Permanent Fund earnings on which the PFD is calculated based on a percent of market value (POMV) approach, then caps the PFD at one-third of the resulting draw.
While better than the Senate plan -- which caps the PFD at one-quarter of a POMV-based withdrawal -- the House plan still falls far short of the 50/50 split, based on actual realized earnings rather than an artificially established percentage, originally envisioned by Governor Hammond and the other founders of the PFD program and incorporated into current statute.
As a result, the House plan still carries with it the same general effects as the original Senate plan. Using ISER's 2016 report to analyze the effects, the House plan -- and thus, the LeDoux/Tuck proposal -- still relies heavily on on a mechanism (a PFD cut) which:
LeDoux & Tuck deserve credit for doing a better job at obfuscating their intention than Wohlforth. In his piece, Wohlforth came out and said:
A dividend of $1,100, close to the historic average, seems about right. It will do the good we need but is not enough to distort behavior and the economy. A constitutional amendment should set the dividend at that amount permanently with a cost-of-living adjustment to keep it from eroding due to inflation.Being politicians, the LeDoux/Tuck piece avoids a similarly specific sentence.
But reading the full column it becomes clear that what Reps. LeDoux & Tuck have in mind is including in the Constitution a PFD calculated along the lines of that included in the Alaska House Majority Coalition fiscal plan introduced last session.
That plan first resets the annual draw from Permanent Fund earnings on which the PFD is calculated based on a percent of market value (POMV) approach, then caps the PFD at one-third of the resulting draw.
While better than the Senate plan -- which caps the PFD at one-quarter of a POMV-based withdrawal -- the House plan still falls far short of the 50/50 split, based on actual realized earnings rather than an artificially established percentage, originally envisioned by Governor Hammond and the other founders of the PFD program and incorporated into current statute.
As a result, the House plan still carries with it the same general effects as the original Senate plan. Using ISER's 2016 report to analyze the effects, the House plan -- and thus, the LeDoux/Tuck proposal -- still relies heavily on on a mechanism (a PFD cut) which:
- “Has the largest adverse impact on the economy [of all the new revenue options] per dollar of revenues raised,” https://goo.gl/ZxR1Hw at A-15;
- Is “by far the costliest measure for Alaska families,” https://goo.gl/ivf9D2 at 1; and
- “[W]ill likely increase the number of Alaskans below the poverty line by 12–15,000 (2% of Alaskans),” https://goo.gl/iuTjv2 at 14.
The LeDoux/Tuck proposal doesn't change that result. Instead, it makes it even worse by proposing to enshrine a large part of the approach in the Constitution.
As we said when discussing the Wohlforth piece, we anticipate that some are hoping:
... that Alaskans, disappointed in the [recent] Supreme Court's decision ... will grab at anything, literally anything, that proposes to "Constitutionalize the PFD."
But we, at least, will not.
Instead, we are going to hold out for the thing that we believe -- and the available evidence and studies support -- best serves the overall Alaska economy and Alaska families. And that is Governor Hammond's vision for use of the earnings produced from the Permanent Fund outlined in Diapering the Devil, as enshrined in the Alaska statutes since the early 1980's:
"Each year one-half of the account’s earnings would be dispersed among Alaska residents …. The other half of the earnings could be used for essential government services.” Diapering the Devil, https://goo.gl/FFTi9M at 15, 19.As with others before it, the LeDoux/Tuck proposal falls far short of that objective.
We hope others will join us in holding out for the "real thing" and dismissing the LeDoux/Tuck op-ed as quickly as Wohlforth's was before it.
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