by Kate McFarland | Sep 29, 2016 | News
The amount of this year’s Alaska Permanent Fund Dividend was announced by the Governor on Friday, September 23: every Alaskan will receive $1,022, less than half the amount of last year’s dividend.
Since 1982, the State of Alaska has distributed annual cash dividends to all of its residents, including children, funded from income from the state’s sovereign wealth fund. Because the payment is universal and unconditional, it has often been discussed as a “real world” example of a basic income. Last year, the Permanent Fund Dividend (PFD) reached its peak amount of $2,072. (The historical average about of the PFD is about $1,150.)
Earlier this year, however, Governor Bill Walker vetoed about half of the allocations to the PFD passed by the state legislature. As a result, this amount of this year’s PFD will drop to $1,022 — according to an official statement issued by the Governor on Friday, September 23.
Walker tasked junior high school student Shania Sommer (who also announced the size of last year’s PFD) with the announcement:
As Walker explains in response to questions from Sommer, he believes that reducing the size of the dividend was necessary in order to preserve the dividend program “for generations to come” in the face of the state’s present budget crisis (Alaska currently faces a $4 billion deficit).
Walker further elaborated upon his decision in an editorial in Alaska Dispatch News, published shortly after the announcement of the size of the 2016 dividend:
In the past few years, revenues have plummeted while Permanent Fund investment earnings have grown. The current dividend formula would have us spending more on dividends than any other state service – including education. It’s not a sustainable path.
If we do nothing, the fund’s earnings reserve will likely be depleted within four years. Then dividends will be zero. I don’t want that to happen.
My commitment to Alaska and Alaskans has never wavered. I believe we must find a balance between the wants of today and the needs of tomorrow. If we don’t make changes, we’re on a course to economic disaster. It’s a 100 percent preventable disaster, and I will do everything I can to prevent it.
The official statement from the Governor’s Office also specified that, were it not for Walker’s veto, the PFD would have been $2,052.
Following Walker’s veto of half of the PFD funding, polls revealed a significant drop in his approval rating and popularity amongst American governors. Recently, a Facebook group called “Alaskans Against Gov. Walker’s PFD Theft“–which is planning its first protest on October 1–has attracted over 12,000 members.
A state senator, Democrat Bill Wielechowski, filed a lawsuit on September 16, demanding that the courts require the corporation that manages the Alaska Permanent Fund to transfer the full original amount of the PFD. Wielechowski claims that Walker’s veto of the funds was not authorized by law. The Alaska Democratic Party has expressed support of Wielechowski’s action. However, the suit is not expected to be resolved before October, when the Alaskans begin to receive their $1,022 checks.
References
Nathaniel Herz, “Gov. Walker’s veto cuts Alaska Permanent Fund dividends to $1,022“, Alaska Dispatch News; Sep 23, 2016.
Cameron Mackintosh, “$1,022: Governor Walker reveals exact amount of 2016 PFD checks“, KTUU; Sep 23, 2016.
Bill Walker, “Dividend cut hurts, but it’s the wise course for Alaska“, Alaska Dispatch News; Sep 23, 2016.
Liz Raines “Walker’s popularity dips after announcing PFD cap, polls show“, KTVA Alaska; Sep 21.
Reviewed by Dawn Rozakis
Image: Shell Oil drilling platform CC BY-NC-ND 2.0 Tom Doyle
Made possible in part by Kate’s supporters on Patreon
by Kate McFarland | Sep 22, 2016 | News
On Friday, September 16, Alaska senator Bill Wielechowski filed a lawsuit contesting Governor Bill Walker’s veto of half of the funding for the Permanent Fund Dividend.
Governor Bill Walker
CC BY 2.0 James Brooks
Last June, Alaska Governor Bill Walker vetoed half of the funds that the state legislature had approved for the annual payout of the Permanent Fund Dividend (PFD). This unprecedented decision caps the size of the dividend at $1000 per resident. The amount vetoed–over $666 million–is to remain in the Permanent Fund, where it may be used for future payouts.
Created in 1982, the PFD is an annual dividend paid to all Alaskan residents–both adults and children–who have resided in the state for at least one calendar year. The dividend fund is financed from the investment earnings of the Alaska Permanent Fund, a sovereign wealth fund established from the state’s oil revenue. As a universal and unconditional cash payment, the PFD has often been cited as an example of a small basic income.
Last year, the dividend reached its all-time peak amount, at $2072 per resident. The Alaskan media station KTUU has estimated that the dividend checks would have been about $2084 this year, had it not been for Walker’s veto.
However, the state has been facing a massive budget crisis–with a current deficit of about $3.2 billion–and the PFD has come under increasing threat within the past year. Governor Walker’s veto of the dividend funds was part of a total $1.29 billion in spending cuts, aimed at addressing the fiscal crisis.
At a news conference in June, following the veto, Walker said the state can no longer afford high annual dividends like the 2015 payout. Walker believes that limiting annual payouts is necessary to extend the lifespan of the Permanent Fund, as he has explained by analogy with the popular Alaskan delicacy of sourdough pancakes:
I’m a big fan of sourdough pancakes. And if we treat our Permanent Fund like we treat sourdough starter, we’ll be fine. No one would ever use up all the sourdough starter. The first thing you do is you take it out and leave it for the next batch [1].
Unsurprisingly, Walker’s veto has generated significant controversy–with some questioning its legality from the start. In the latest move, present and past state senators have attempted legal action to effectively overturn the Governor’s decision.
Senator Bill Wielechowski
CC BY-SA 4.0 Peter Stein
On Friday, September 16, senator Bill Wielechowski (Democrat), along with former senators Rick Halford and Clem Tillion (Republicans), filed a lawsuit requesting the court to demand the Permanent Fund Corporation transfer the full $1.4 billion that the legislature had originally allocated for the dividend.
According to Wielechowski, Walker’s action violates a law (Alaska Statute 37.13.145) that requires that the Permanent Fund Corporation “shall” transfer half of its available income to the Dividend Fund. Wielechowski has maintained that law demands the transfer of funds from the Permanent Fund Earnings Reserve to be automatic and not subject to decisions made in the state’s annual budget.
He previously expressed his position in a letter to Angel Rodell (dated August 10), the executive director of the Permanent Fund Corporation, in which he requested that the Permanent Fund Corporation “follow the law and immediately make [the] full transfer” of funds from the Earnings Reserve to Dividend Fund. Rodell did not respond, however, prompting Wielechowski to proceed to legal action.
The Alaska Democratic Party expressed support of Wielechowski’s lawsuit in a press released issued on September 20.
Journalist Cameron Mackintosh reports that Wielechowski has recently issued a public letter in which he reiterates his belief that Governor Walker lacked the authority to cut the PFD:
Hundreds of hours of research leads me [Wielechowski] to conclude that the Governor does not have the authority to cut Dividends in the way he proposes. The Governor cannot veto existing law. No governor can. His veto power extends only to appropriations and bills [2].
Walker promptly issued an official statement responding to the lawsuit. In the statement, Walker expresses his intent to stand by the “difficult but necessary decision–prompted by the legislature’s failure to pass a fiscal plan–to veto part of this year’s dividend appropriation”. He goes on emphasize that the decision was driven in part by the desire to preserve the PFD for future generations:
This year’s PFD is close to the historical average paid to every eligible Alaskan since 1982. It was set at a level that could be sustained as part of a larger fiscal solution–to ensure a PFD program continues for generations to come.
Walker also uses the letter to reprimand Wielechowski for failing to work towards a solution to the state’s financial crisis, contending that the lawsuit detracts from this larger issue [3].
The Governor has similarly defended his veto in a Facebook post dated September 13:
My decision to veto half of the money for this year’s dividend was a difficult one, made with painstaking forethought and consideration. Without my veto, the money that funds PFDs would be gone in just four years. Ultimately, I want Alaskans to be able to receive a PFD for years into the future, and $1,000 this year means our kids and grandkids can look forward to a similar dividend in the years to come.
It is Walker’s belief that, due to the state’s worsening fiscal crisis, it may eventually be necessary to draw money from the Permanent Fund Earnings Reserve to cover deficits–and that, thus, lower annual payouts are needed to extend the fund’s life.
Co-plaintiff Clem Tillion, in contrast, has recently written an editorial in which he contends that the best way to preserve the future of Permanent Fund (and, thus, the dividend) is to “just leave it alone” [4].
On Friday, September 23, Governor Walker will make an official announcement on the amount of the 2016 Permanent Fund Dividend. His office will also disclose the amount that the dividend would have been without the veto [5].
The first payouts will begin on October 6. The lawsuit is unlikely to be settled by this time.
Sources and Further Information:
Complaint for Declaratory and Injunctive Relief (Court document filed by Wielechowski, Halford and Tillion)
Governor Walker’s Statement on PFD Lawsuit
“Democrats Support Getting an Answer” (Press Release from Alaska Democratic Party)
Nathaniel Herz (September 16, 2016) “Alaska lawmaker sues to restore full PFD after Gov. Walker’s veto,” Alaska Dispatch News.
Cameron Mackintosh (September 16, 2016) “Sen. Wielechowski files lawsuit challenging governor’s PFD cuts,” KTUU.
Liz Raines (September 16, 2016) “Past, present lawmakers file joint lawsuit to overturn governor’s PFD cut,” KTVA Alaska.
[1] Alex DeMarban and Yereth Rosen (June 30, 2016) “ ‘Day of reckoning’: Gov. Walker vetoes hundreds of millions in spending, caps Permanent Fund dividend at $1,000,” Alaska Dispatch News.
[2] Cameron Mackintosh (September 16, 2016) “Sen. Wielechowski files lawsuit challenging governor’s PFD cuts,” KTUU.
[3] Bill Walker (September 16, 2016) “Statement on PFD Lawsuit”
[4] Clem Tillion (September 15, 2016) “Want to save the Permanent Fund and Dividend? Leave them alone,” Alaska Dispatch News.
[5] Ben Anderson (September 21, 2016) “On Friday, Alaskans will find out this year’s PFD amount — and what it could have been,” Alaska Dispatch News.
Reviewed by Asha Pond
Alaska Pipeline photo CC BY 2.0 Ryan McFarland (no relation to author)
Article originally written on September 16; edited on September 22 to include reference to the Democratic Party’s press release and the Governor’s forthcoming announcement on the PFD.
by Josh Martin | Oct 26, 2015 | News, Research
New research from economists at Hallym University in Chuncheon and Korea University in Seoul found that Alaska’s Permanent Fund Dividend has helped increase birth weights for Alaska newborns. According to the study, from 1978 to 1984, the dividend cash transfer increased weight by 34.8 grams (1.23 ounces) and reduces the likelihood of low birth weight by 14 percent when comparing to other states during the same period. Some Alaskan economists and pediatricians have raised doubts over the study, however, claiming that the study coincides with a time of big social and economic change in Alaska and thus the improvement must not be attributed solely to the Permanent Fund Dividend. Regardless, this study produces further arguments for the benefits of unconditional cash transfers like a basic income or the Permanent Fund Dividend.
For more background read the following link:
Yereth Rosen, “Does the PFD make babies bigger?”, Alaska Dispatch News, 10 October 2015.
The study itself can be found here:
Wankyo Chung, Hyungserk Ha, and Beomsoo Kim, “Money Transfer and Birth Weight: Evidence from the Alaska Permanent Fund Dividend”, Economic Inquiry, 23 June 2015.
by Citizens' Income Trust | Feb 28, 2014 | Opinion
Karl Widerquist and Michael W. Howard (eds), Exporting the Alaska Model: Adapting the Permanent Fund Dividend for reform around the world, Palgrave Macmillan, 2012, 1 137 00659 2, hbk, xix+ 291 pp, £65
In 1797 Thomas Paine suggested that, because in principle the land belongs to everyone equally, those who occupy it should pay a ground rent to the whole community. We can generalise the profits that landowners reap from the occupation of land into the concept of ‘economic rent’: if someone uses natural resources that belongs to all of us in order to make money, then any income greater than the cost of production is ‘economic rent’. Paine would have made the point that the economic rent belongs to all of us.
Oil companies extract oil from Alaska, and the Alaskan State Government taxes the oil companies and pays a proportion of the tax revenue into a permanent fund. The fund pays an equal annual dividend to every citizen of Alaska. Thus the economic rent relating to oil extraction benefits the whole community. The Alaskan Permanent Fund Dividend is not a Citizen’s Income because it is an annual payment and it varies with the profits made by the Permanent Fund. Recently the dividend has been rather lower than previously – but, as the book points out, wherever economic rent arises from the exploitation of natural resources, a government can collect tax on private profits and use the tax revenue to pay a Citizen’s Income.
The editors are candid about the genesis of this book: it contains material by a variety of authors that would not fit into their earlier Alaska’s Permanent Fund Dividend: Examining its suitability as a model; but having said that, all of the material is directly relevant to the theme expressed by the title of this second book.
Part I employs the Alaska model – natural resource tax revenue, a permanent fund, and an equal dividend to every citizen – to ask where similar circumstances might make a similar dividend possible. Hamid Tabatabai tells how Iran has stumbled into paying a Citizen’s Income ( – though here natural resource tax revenue pays directly for a Citizen’s Income without building a permanent fund). Angela Cummine asks why other similar permanent funds do not pay dividends to citizens, and concludes that the root reason is probably government desire to retain control over the funds and their incomes; Alanna Hartzok suggests that the Alaska Permanent Fund should be invested in more environmentally and socially responsible ways before the idea is exported; and Groh asks what will happen when oil revenues dry up.
Part II asks how the Alaska model might be applied where natural resources are not being extracted. Flomenhaft shows that if other such public assets as water, public forests, broadcast spectrum, and land value were to be treated in the same way as Alaska treats its oil, then taxes on the exploitation of such common resources could easily fund a permanent fund that would pay a dividend at least as large as Alaska’s. Segal shows that employing such a policy in developing nations could cut world poverty by half. Hickel finds that South Sudan could fund both a substantial dividend and infrastructure improvements by employing the Alaska model. Hammond suggests that Iraq should employ the Alaska model to enable all of its people to benefit from oil revenues ( – Jay Hammond was the Governor of Alaska who achieved the Permanent Fund and the Dividend, and his chapter is published posthumously). Howard suggests that governments should cap carbon emissions and then sell the rights to emit carbon up to this cap in order to fund a permanent fund and therefore a dividend. Widerquist studies the feasibility of a US fund paid for by taxing the exploitation of a variety of common resources, and suggests that this approach should be employed in Alaska in order to maintain the fund and dividend as oil revenues decline.
Part III explores Widerquist’s proposal for capital accounts ascribed to each individual citizen at birth. The funds’ owners can spend the dividends whenever they wish, but cannot spend the capital, which is passed on to their future generations.
The editors’ final chapter suggests that the Alaska model should be viewed more as a list of questions inviting answers than as a fixed detailed policy to be applied in its entirety: Does the government wish to capture some of the economic rent generated by resource exploitation? Does the government wish to create a permanent fund? Does the government wish to pay a dividend to citizens? How large should it be? What proportion of tax revenue will relate to natural resource exploitation? Does the government wish to pay a variable annual dividend, as in Alaska, or does it wish to pay a more regular and less variable Citizen’s Income?
As the proportion of gross domestic product distributed as wages declines, and a greater proportion accrues to capital (an inevitable process in a globalising economy), and as taxing corporations becomes increasingly difficult (another consequence of globalisation), governments will need to find new ways to fund both government expenditure and individuals’ incomes. The obvious way to do this is to tax the value of common resources, and particularly the value of land and of natural resources extracted from it (because however global the economy, nobody can remove land or the resources contained under it, including water). Using the proceeds to fund a Citizen’s Income would benefit both society and the economy. If economic rent from declining natural resources is used to fund a Citizen’s Income then a permanent fund will ensure that revenue can be generated when the natural resource runs out. If economic rent from the exploitation of a natural resource that is in constant supply (such as land) is used to fund a Citizen’s Income then a permanent fund is not required.
This book is a most useful companion to Alaska’s Permanent Fund Dividend: Examining its suitability as a model, and is a book that any government concerned about falling tax revenues should read.
by Karl Widerquist | Aug 14, 2013 | Research
Written as response to the article, “Six Lessons from the Alaska Model,” by Karl Widerquist, C.A. L’Hirondelle, Frederik Schenk, and Eric Manneschmidt argue that resource dividends are not a good source of funding for a basic income because, “The Alaska Permanent Fund and concepts like it are created to corrupt people into accepting a business that they might otherwise strongly oppose.” The authors support BIG, but not this method of financing.
L’Hirondelle, C.A., Frederik Schenk, and Eric Manneschmidt, “Why Alaska Permanent Fund Dividend is a bad idea,” Livable4all, July 12, 2013.
From Livable4all
