by Kate McFarland | Jul 10, 2017 | News
The Economy Security Project (ESP), a two-year fund launched in December 2016 to support investigation of basic income in the United States, has published the results of a new survey of Alaskans’ attitudes towards the state’s Permanent Fund Dividend (PFD).
The Permanent Fund Dividend
In 1976, the Alaska State Constitution created a permanent fund in which the state must invest at least 25% of its oil revenues, enabling wealth generated from the sale of a nonrenewable resource to continue to benefit future generations of Alaskans. The PFD, created in 1982, distributes a portion of the fund’s earnings as a dividend paid annually to all Alaskans.
Disbursed in equal amount to all adults and children who have lived in the state for more than a year (and intend to remain indefinitely), the PFD is widely regarded as one of the nearest “real world” examples of a basic income. Although its amount is variable, and too small to guarantee even a poverty-level existence, the PFD is universal, unconditional, and paid in cash at regular intervals, entailing that it does indeed satisfy BIEN’s definition of a basic income.
The PFD reached a peak amount of $2,072 per resident in 2015, but fell to $1,022 in 2016 after Governor Bill Walker used a line-item veto to cut the funds allocated to the PFD by the Alaska Legislature by more than half–a controversial decision that provoked a lawsuit from State Senator Bill Wielechowski, seeking to restore the full amount of the 2016 PFD approved by the legislature. Without Walker’s veto, the amount of 2016 PFD would have been $2,052.
At the time of this writing, Wielechowski’s lawsuit is being considered by the Supreme Court of Alaska, having been dismissed by a Superior Court judge in November of last year. The Supreme Court heard oral arguments on June 20, but its final decision is likely to take months.
Meanwhile, Governor Walker recently signed the state budget for 2017, without exercising any line item vetoes this year. According to KTOO News, the budget includes $760 million for the PFD, which will amount to about $1,100 per Alaskan.
Popular Opinion Survey
Earlier in the year, ESP commissioned a telephone survey 1,004 Alaskan voters, carried out by the market research firm Harstad Strategic Research. According to ESP, the new survey is the “most comprehensive review of public attitudes about the PFD since 1984.”
Respondents answered a variety of questions concerning their attitudes toward the Permanent Fund and Dividend. Asked how much of a difference the PFD has made in their lives “over the past five years or so,” 40% replied that the dividends have made a “great deal” or “quite a bit” of difference, with 28% replying that the dividends have made “only some” or “just a little” difference, and only 8% saying that the dividends have made no difference. Women were more likely than men to say that the PFD has made “great deal” or “quite a bit” of difference (47% versus 33%), and 70% of those who described their economic circumstances as “barely surviving” stated that the PFD had this degree of impact.
While 87% of respondents agreed with the statement, “How people spent their Permanent Fund checks should not determine whether or not the dividend program continues,” respondents meanwhile do not believe that Alaskans use their annual PFD checks frivolously: 85% of agreed that “Many people spend a large part of their Permanent Fund dividends on basic needs,” and 79% agreed that “The Permanent Fund dividend checks are an important source of income for people in my community.” A comparatively small number, though a sizeable minority (43%), agreed with the statement “Many people have wasted a large part of their Permanent Fund checks on such things as liquor or drugs.” Asked about their own spending behavior, 27% replied that they save all or most of the payments, while 30% say that they use the PFD to pay off credit cards or other debt.
Respondents also view the universality of the PFD favorably: 72% support the fact that “everyone who is basically a full-time resident of Alaska” receives the PFD, and 84% agree that “As owners of the Alaska Permanent Fund, Alaska residents are entitled to an equal share of the earnings of the Fund.” Interestingly, though, only 50% favor the distribution of the PFD to “millionaires and multi-millionaires living in Alaska,” suggesting that framing effects may influence respondents’ expressed attitudes towards universality.
The survey also suggests that–in an apparently pronounced change of opinion since the 1984 survey–a majority of Alaskans would prefer the institution of a state income tax over the termination of the PFD if it became necessary for the state to adopt one of these measures to raise money for government services. The preference for keeping the PFD was strongest among those with annual household incomes under $50,000 (72%) and those who described their situation as “barely surviving” (82%). Even those respondents with household incomes over $100,000 tended to prefer preserving the PFD to avoiding income taxes (58%).
Many other related questions were also included in the survey. For more details and graphical displays, see the links in “more information” below.
More Information
Economic Security Project, “Alaska PFD Phone Survey: Executive Summary,” June 22, 2017. Official Executive Summary of the survey’s findings, prepared by Harstad Strategic Research.
Supplemental materials from Harstad Strategic Research:
Taylor Jo Isenberg, “What a New Survey from Alaska Can Teach Us about Public Support for Basic Income,” Medium, June 28, 2017. Blog post summarizing of survey results, with background about the PFD.
Photo CC BY-NC-ND 2.0 U.S. Pacific Command
by Guest Contributor | Mar 26, 2017 | Opinion
Alaska’s Permanent Fund, Dividend and the central idea that minerals are a shared inheritance have inspired numerous social and political movements across the globe. The Goenchi Mati (“Goan Earth”) Movement in Goa, India, of which I am a part, has drawn from the experiences of Norway and Alaska with their permanent funds.
Our core principles are (a) minerals are owned by the state as a trustee for the people and especially future generations (Public Trust doctrine); (b) minerals are inherited assets and our duty is to ensure that future generations have access to the minerals or their value (Intergenerational Equity principle); (c) mining is essentially a sale of minerals, hence we must ensure zero loss mining – in other words, the full value (the sale value minus all extraction costs and a reasonable profit for the extractor)[1] must be received by the state as trustee; (d) everything received must be saved in the Permanent Fund, which must also be inflation proofed, ensuring the capital is safeguarded; and (e) any real income from the Permanent Fund must only be distributed as a Citizen’s Dividend, a right of ownership over the minerals and the Permanent Fund.
It is not clear if Alaska has received the full value of its oil; whether zero loss mining was achieved. Any loss is a loss to everyone equally. It is simply a per head wealth tax imposed on everyone, with the oil companies making merry. Based on data in India and other parts of the world, we anticipate a majority of the value of the oil has been captured by the oil companies. If this is the case, it is a loss that will be borne by future generations of Alaskans. A close examination is potentially warranted, and additional taxes on oil may be necessary to ensure zero loss mining.
When we sell an inheritance, we must invest everything in a new non-wasting asset of equal value. Traditionally, inheritances are held in precious stones, precious metals or land. These assets retain their value over generations. The Permanent Fund is a recent innovation designed to replicate this function. Inflation proofing is essential in order to ensure that the fund retains the real value of the natural resources in perpetuity. While over 50 such funds exist around the planet, Norway and Alaska are the exemplars.
In contrast, infrastructure is a wasting asset, it depreciates or reduces in value over time. Even investments in health and education perish with the beneficiary. Hence, a diversion of oil money from the Permanent Fund to the budget eventually cheats future generations of their inheritance. Only a fiscal rule of saving 100% of the oil money ensures that the present generation does not cheat their children and all future generations.
Norway, the other exemplar of natural resource management, follows the fiscal rule of saving all money from oil in the Government Pension Fund Global. Norway inflation proofs its fund by regularly estimating the long term after-inflation (real) return on their fund, and capping the distribution below this level based on the 5 year average fund balance.
Imagine taxing everyone equally, rich or poor. It is almost impossible to legislate a per head tax – a tax on existence – in a democracy. It is clearly unfair. Yet, the current proposals in Alaska to divert some of the income of the Permanent Fund to the state budget is equivalent to a per head tax (to the extent of the lost dividend). Put simply, a legislation to tax everyone $1,000 would never pass. Yet, this is exactly equivalent to reducing the dividend by $1,000 and paying that amount to the budget.
Alaska’s current budget troubles stem from a central misconception of the nature of oil money. Government accounting treats it as “windfall revenue”. Yet, it is obviously the sale of the family gold. Jay Hammond’s first experience with natural resources was with salmon runs in Alaska’s Bristol Bay. As long as salmon runs are managed sustainably, the money is revenue, equivalent to the fruit of the natural resource.
Mining is unsustainable. Every barrel of oil extracted is one less in the ground. While Jay Hammond managed to see through the deceptive government accounting, his initial proposal to save 50% of the oil money did not go far enough. Eventually, only 25% of the oil money was saved, and 75% treated as revenue in the Alaska budget.
The impact is obvious. Alaska’s budget soared from $3 bn in 2005 to $8 bn in 2013 on the back of the China boom. Expenditures followed. The crash has thrown the budget into turmoil. However, if Alaska had treated all the oil money as a sale of the family gold and saved it, the ballooning of the budget wouldn’t have occurred.
It is a difficult time to consider saving all the oil money into the Permanent Fund, and only paying out a dividend without any diversion to the budget. Yet, it is the only ethical course of action. Any legislative proposal worth examining must mandate that this comes to pass within a limited time frame. Otherwise, Alaska will continue to suffer from budget volatility due to oil price fluctuations, and this issue will recur.
Alaska’s Permanent Fund Dividend is the largest example of a Citizen’s Dividend as well as Universal Basic Income in the world. A central idea of the Goenchi Mati principles is that the Citizen’s Dividend creates the link, financial and emotional, between the individual, their shared inheritance and their moral obligations to future generations. The expectation is individuals safeguarding their dividend would by extension safeguard the Permanent Fund and the overall mineral value. The current Alaska budget crisis is a second test of this seminal idea of Jay Hammond.
The world watches with bated breath. Will Alaskans come out in large numbers to protect their children and future generations? Will individual interest and morality triumph as Jay Hammond predicted? Or will another beacon of what is fair, just and right in this world succumb?
About the author:
Rahul Basu is a member of the Goenchi Mati Movement, which advocates fair mining in the state of Goa.
[1] This is the Economic Rent
by Kate McFarland | Jan 9, 2017 | News
A newly launched grassroots campaign is using social media and video to protest recent cuts to the state’s annual dividend.
As reported in previous Basic Income News stories, Alaska Governor Bill Walker vetoed half of the Legislature’s allocations to the 2016 Permanent Fund Dividend (PFD). Often regarded as one of the best examples of “real-world basic income,” the annual PFD provides all Alaskan adults and children with checks of an equal amount, funded by earnings on a permanent fund in which a portion of the state’s oil revenues are invested.
The amount of the PFD reached its peak of $2,072 in 2015. In 2016, it dropped to $1,022 — though it would have been $2,052 absent Walker’s veto.
Although intended to help preserve the PFD during a significant budget crisis, Walker’s action unsurprisingly generated much controversy. State senator Bill Wielechowski filed a lawsuit charging that Walker’s veto was unconstitutional. The suit was dismissed by a superior court judge in November, but Wielechowski has appealed the decision to the Alaska Supreme Court.
With the Supreme Court hearing likely not to take place until April or May, a group of 12 lawmakers and activists have launched the nonpartisan grassroots group Permanent Fund Defenders, which advocates for the restoration of the full amount of the PFD. The group currently operates primarily through social media, and has created animated videos describing the history of the PFD (see below).
On its Facebook page, the Permanent Fund Defenders demonstrate solidarity with the Goenchi Mati Movement in the Indian state of Goa (previously profiled in Basic Income News), which promotes the establishment of a permanent fund and citizen’s dividend based on money from the sale of minerals.
More information:
Liz Raines, “Former lawmakers, political activists launch group to block PFD restructure,” KTVA, January 3, 2017.
Previous Basic Income News reports on the recent PFD controversy:
Kate McFarland (September 22, 2016) “ALASKA, US: Senator files suit against Governor’s veto of half of Permanent Fund Dividend”
Kate McFarland (September 29, 2016) “ALASKA, US: Amount of 2016 Permanent Fund Dividend to be $1022”
Kate McFarland (December 3, 2016) “ALASKA, US: Judge Upholds Governor’s Veto of Part of State’s Social Dividend”
Reviewed by Genevieve Shanahan
Photo: Shell Oil drilling rig, CC BY 2.0 Day Donaldson
by Kate McFarland | Dec 3, 2016 | News
A superior court judge has upheld the Governor of Alaska’s decision to halve the amount of the state’s annual social dividend payment in 2016.
Senator Bill Wielechowski
CC BY-SA 4.0 Peter Stein
As previously reported in Basic Income News, Alaskan senator Bill Wielechowski filed a lawsuit in which he contested Governor Bill Walker’s veto of about half of the funding that the state legislature had allocated to the state’s Permanent Fund Dividend (PFD) and asked the courts to require that the Permanent Fund Corporation transfer the full amount originally allocated to the PFD.
Walker vetoed the funds in June 2016, in the face of a mounting budget crisis in the state, and Wielechowski filed his suit in September. On November 17, Superior Court Judge William Morse dismissed the case.
The Alaska Permanent Fund was established in 1976 by an amendment to the Alaska State Constitution that mandated that at least 25% of the money earned from the state’s oil be placed into a permanent fund, enabling the state to share its profits from non-renewable resources with future generations of Alaskans. In 1980, the Permanent Fund Corporation was created to manage the fund. Financed from the investment earnings on the permanent fund, the PFD is a cash payment distributed annually to all permanent residents (including children). The PFD is well-known in basic income circles as a “real world” example of a basic income–a universal and unconditional cash transfer to individuals. The PFD reached its peak amount of $2,072 in 2015, and it would have stood at $2,052 in 2016 had Walker not vetoed the legislature’s budget. Instead, this year’s PFD is $1,022 per Alaskan resident.
In previous years, the transfer of money from Permanent Fund Corporation to the fund for the dividend has been routine and uncontested.
In his suit, Wielechowski charged that Walker violated a law (Alaska Statute 37.13.145) that states that the Permanent Fund Corporation “shall” transfer half of its available income to the fund for the PFD. On Wielechowski’s interpretation, this statute implies that the transfer of funds is “automatic” and thus not subject to veto by the governor.
Morse argued, however, that the amendment setting up the Permanent Fund did not specify that it would affect the governor’s power of veto, saying to Wielechowski, “You’re telling me that what they secretly were trying to do was eliminate the governor’s veto authority, but they never mentioned that?”
Wielechowski has said that he will appeal the decision to the Alaska Supreme Court.
References
Alaska Dispatch News (November 17, 2016) “Judge tosses lawsuit challenging Alaska Gov. Walker’s PFD veto” Alaska Dispatch News.
Andrew Kitchenman (November 17, 2016) “Judge upholds Walker’s veto halving Permanent Fund dividends” KTOO Public Media.
Alaska pipeline photo CC BY 2.0 Maureen
by Kate McFarland | Oct 9, 2016 | News
At a press conference on Wednesday, October 5, Alaska state senator Mike Dunleavy (Republican) announced plans to introduce legislation to restore the 2016 Permanent Fund Dividend (PFD) amount to $2052, the full amount calculated by the Alaska Permanent Fund Corporation. Earlier in the year, Governor Bill Walker vetoed over half of the state legislature’s appropriation of funds to the PFD, resulting in an amount of $1022 per Alaska resident.
Alaskan residents have joined in protest of the cuts in the PFD. More than 15,000 individuals have joined the Facebook group “Alaskans Against Gov. Walker’s PFD Theft”, which organized a protest at an Anchorage budget forum held on Saturday, October 1.
Meanwhile, a lawsuit by Democratic state senator Bill Wielechowski — which charges that Walker’s veto was illegal — is awaiting resolution. In response to a request for an expedited review, arguments have been set for November 17 in Anchorage.
As a universal and unconditional cash transfer, paid annually to all residents of Alaska, the PFD is frequently cited as an example of a “real world” universal basic income. It continues to be presented as a model for UBI policies by groups ranging from the Movement for Black Lives in the United States to the Goenchi Mati Movement in the Indian state of Goa.
References and further information:
Nathaniel Herz (October 6, 2016) “Alaska lawmaker stokes Permanent Fund fight with push to add $1,000 to dividends” Alaska Dispatch News.
Paula Dobbyn (October 5, 2016) “State senator prepares bill to restore full amount of 2016 Permanent Fund dividend” KTUU.
Travis Khachatoorian (September 30, 2016) “With reduced PFDs on the way, protests expected at budget forum” KTUU.
Reviewed by Genevieve Shanahan
Photo: Juneau Morning, CC BY-NC 2.0 Dale Musselman
