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 | 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 Andre Coelho | Mar 20, 2016 | News
Jenna van Draanen. Credit to: The Big Picture.
The Big Picture, the American political news show hosted by Thom Hatmann, has taken an interest in basic income. That interest was spurred by the situation in Canada, where new tests of basic income are being planned, and materialized in inviting Jenna Van Draanen, secretary from the board of directors of Basic Income Canada Network, to the program. The conversation starts with a general description of the Ontario’s recent proposal of a basic income trial, passing through a rough comparison with the Alaska Permanent Fund. Jenna underscores basic income’s potential advantages, such as simplicity, debureaucratization, freedom of choice, empowerment (especially for the poor) and savings in social programs.
More information at:
The Big Picture, “Universal Basic Income has begun” – interview with Jenna Van Draanen
by Tyler Prochazka | Nov 21, 2015 | News
The most common criticisms of a universal basic income (UBI) are that it is unfeasible and too expensive. However, in a recent series on UBI in the Washington Post, some of the strongest attacks dealt with the possibility that it may undermine civil society in the United States.
Jonathan Coppage, associate editor of The American Conservative magazine, argues that a UBI provides the freedom to “no longer be needed” by the marketplace, where many societal bonds are formed. A UBI would remove these ties, Coppage said.
In India, a UBI trial demonstrated instead that a UBI has the potential to increase entrepreneurial and economic activity. Also, unlike the current entitlement system, UBI benefits do not diminish as income rises, so replacing current social services with a UBI can actually encourage individuals to enter the marketplace.
A cautionary tale does emerge from rentier states in the Middle East. Rentier states, such as Saudi Arabia and Qatar, use oil revenue to provide their citizens with lavish social services in order to buy loyalty to the government. Some argue that this environment has contributed to the underdevelopment of rentier states’ civil societies, while others dispute this theory.
Nonetheless, the lessons from rentier states cannot properly be applied to implementing a UBI in the United States. There are far too many cultural and institutional differences (such as the repressive politics of many rentier states) to make these countries a useful case study.
In Alaska, the Permanent Fund Dividend (PFD) provides a more accurate illustration of how a UBI would affect civil society in America. The PFD provides an annual payment from the state’s oil revenues to each citizen of Alaska. It is arguably the closest program to a full UBI in the world.
One of the best measures of the strength of civil society is the level of volunteerism, as it indicates how invested individuals are in the betterment of their communities. Alaska is ranked as having the tenth highest volunteer participation as a percentage of the population in the United States. Additionally, from 1989 to 2006, Alaska’s volunteer rate increased by 10 percent.
Many have made the case that a UBI would increase support for civil society as it would allow individuals to shift some of their time to civic engagement. Although more in-depth statistical analysis would be needed to demonstrate that Alaska’s high volunteerism rate is a partial result of the PFD, it is easy to see why it may be the case; the financial freedom resulting from a UBI allows people to dedicate more time to activities that truly benefit them and their community.
At the very least, the experience in Alaska shows us that a universal basic income in the United States would not be the death of civil society. In fact, it could be the very stimulus civil society needs to thrive.
