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 Karl Widerquist | Oct 16, 2015 | News, The Indepentarian
Alaska’s small basic income, the Permanent Fund Dividend (PFD), is coming under increasing political attacks as the state’s fiscal crisis grows. the dividend, in place since 1982, has been incredibly popular, but the double-hit of declining oil prices and declining oil production have created a fiscal crisis that has forced the state to look for new revenues. As Basic Income News has reported recently, both legislators and the Alaska public have shown an increased willingness to divert Permanent Fund earnings from the dividend to the state general budget.
As this year’s record-setting dividend checks of $2072 were being distributed, several editorials argued for reducing or eliminating the dividend and using that money to fill the state’s budget gap.
Craig Johnson, Chairman of the State House Rules Committee, recently spoke in defense of the fund, but went so far as to say only that touching the Permanent Fund should be a “last resort” that he does not support, “right now.”
Paul Jenkens, Tim Hale, and Mike Navarre have all written in favor of diverting funds from the dividend, and the Ketchikan Borough Assembly is considering a resolution urging the state to divert funds.
Some of the arguments are as simple as this statement from Tim Hale, “To me, it comes down to one thing: I’d rather lose my dividend than pay taxes.”
Hale’s attitude is very much the opposite to that of the founder of the dividend, the late Governor Jay Hammond, who believe that a dividend was far more important than a tax reduction. The dividend ensures that all Alaskans, rich and poor, share in the wealth of the state. Only people with substantial incomes benefit very much from lower taxes, and how much they benefit depends on the size of their income.
For more information, see the following articles:
Paul Jenkins, “Don’t tax Alaskans until state cuts to the bone and adopts endowment model for Permanent Fund.” Alaska Dispatch News, September 26, 2015
Tim Hale, “Use Permanent Fund earnings to pay for services – and cap dividend at zero.” Alaska Dispatch News, September 30, 2015
Mayor Mike Navarre, “Permanent Fund earnings can help keep state afloat. “ Fairbanks Daily Newsminer, September 27, 2015
Alaska Business News, “Johnson Touts Benefits of Dividends to Local Economy and Vows to Protect PFD.” Alaska Business News, October 2, 2015
Mary Kauffman, “Ketchikan Borough Assembly Considers Urging State to Include Permanent Fund in Fiscal Plan” Sitnews, October 03, 2015
by Stanislas Jourdan | Sep 23, 2015 | News
Despite the large amount of the annual dividend for 2015, the future of Alaska’s small basic income is under political threats as the state suffers from a large deficit gap.
Confirming earlier forecasts, the amount of Alaska’s citizens’ dividend paid this year will be the highest ever paid (without inflation) since the first payment made in 1982.
Yet, perspectives for what is the closest policy to a universal basic income in the world today are not so shining. Because the Alaskan government is currently trying to cope with an historical budget deficit, various suggestions have been made on how to reduce the state’s deficit, some involving changes in the dividend mechanism, to make it less generous.
The citizens’ dividend is administered by the Alaska Permanent Fund Corporation which was established in 1976 by constitutional amendment.
The fund collects at least 25 percent of all the state’s mineral royalties and lease payments and invests its accumulated reserves in financial markets. The financial earnings are then distributed equally among all Alaskans as a citizens’ dividend.
The amount of the dividend however is based on a five-year rolling average of the financial earnings of the fund, which therefore no longer includes the recession years post-crisis. For this reason, low oil prices have plunged Alaska into a crippling budget deficit, but it hasn’t yet affected the size of the payout.
Thus, more than 644,000 Alaskan residents registered or born before December 31st 2014 will receive their dividend checks beginning on October 1st.
Political Threats on the Future of the Dividend
Despite what seems to be good news, Alaska is now in a paradoxical situation where the earnings from the Permanent Fund have exceeded the earnings from Alaska oil. This paradox has recently provoked a wave of attacks against the dividend, including from Alaska’s current governor, Bill Walker (Republican).
For the ceremonial announcement of the amount of the annual dividend, Walker deliberately chose to let a 12-year-old girl named Shania make the public announcement in order to send a signal that, according to him, the future of Alaska’s children are endangered by the unsustainability of the Fund.
https://vimeo.com/139986120
“We are paying out more in PFD checks than we are for the education of young Alaskans like Shania—at a time when we are struggling with a $3.5 billion deficit,” the Governor stressed in a statement to the press. “Alaskans need to know this is unsustainable. I’m confident Alaskans will pull together to find a solution, as we always do when times are tough.”
“It is time to have an open and honest conversation about our finances, and how resources like the Permanent Fund can be used as an asset. The vision of the Permanent Fund was to turn a nonrenewable resource into a renewable one, and it is our job to determine how to best use and protect that gift for the benefit of all Alaskans.”
A message that was also stressed by Lt. Governor Mallott (D), and Eric Wohlforth, both former members of the Fund’s Board of Trustees, in advance of upcoming debates on how to reform the Fund.
“The original purpose of the Permanent Fund was to save wealth for future generations of Alaskans. This is the people’s fund. In the months before the legislative session, groups will meet to talk about how we should manage our wealth. I urge all Alaskans to become informed investors, for their sake and for the sake of the next generation.” Eric Wohlforth said, thus making the threats against the Fund more precise than ever.
by Karl Widerquist | Sep 1, 2015 | News, The Indepentarian
A recent poll asking Alaskans how to deal with the state’s increasingly severe budget deficit found that trimming the Permanent Fund Dividend or PFD (also know as “the Alaska Dividend”) was the most popular solution. The poll also found that a second strategy for trimming the dividend was third in popularity.
-Alaska Dispatch News
The Alaska dividend is the closest program to a basic income in the world today. Each year it pays out a dividend, usually between $1000 and $2000 per year, financed out of the returns from the Alaska Permanent Fund or APF—a savings portfolio of more than $50 billion accumulated from past state oil revenue. Its enormous popularity earned it the nickname of “the third rail of Alaskan politics,” meaning that any politician who touched it died.
This poll might be an indication that the dividend is losing that status in the face of Alaska’s financial situation, which is deteriorating because of the state’s dependence on oil revenues. The state has no sales or income tax. The vast majority of its revenue comes from taxes, fees, and royalties on the state’s oil exports. Not only have oil prices declined by more than 50 percent since 2014, but the amount of oil exported from Alaska has been declining significantly for years. The state is quickly running through the savings it built up in good years, and it is faced with the situation in which it must either make deep cuts in spending or seek new revenue.
Asking Alaskans to respond to several strategies of dealing with this issue, the Rasmuson Foundation found the following:
- 66% of Alaskans agreed with “Using a portion of excess earning from the Permanent Fund to fund public services and programs while protecting the dividend program.” 27% opposed.
- 57% agreed with “Introducing a statewide sales tax.” 41% opposed.
- 55% agreed with “Putting a cap on the yearly amount of Permanent Fund dividends.” 41% opposed.
- 54% agreed with “Reducing oil development tax credits offered by the state.” 32% opposed.
- 41% agreed with “Introducing a state personal income tax.” 55% opposed.
- 16% agreed with “Making deep funding cuts to essential public services like schools, police, health care, and roads.” 16% opposed.
The first option might not sound like a cut in the dividend, but it is. There are no “excess earnings” in the PDF. Every dollar the PDF receives in returns either goes to spending or to generating more returns and higher dividends in all the years to come. Any strategy that defines some returns as “excess” and diverts those to other spending, necessarily means lower dividends in the future. This opinion protects the existence of the dividend, but it does not protect its future growth or even its current level. If any significant amount is taken in “excess earnings,” it will slow the growth of the dividend in the future, and it might even create negative future growth in the dividend.
The poll did not ask people whether they would support eliminating the dividend entirely, but over time either of the two strategies suggested would lead to significantly smaller dividends than what would otherwise occur.
The poll also did not ask about spending the principal of the PFD, which is constitutionally protected. The legislature would need a constitutional amendment to spend down the $52 billion fund, but with a simple majority vote, it could cancel the dividend and use that money to finance state spending. Before the recent fiscal crisis, such a strategy was politically untenable, but the poll shows that movement in that direction might have become politically tenable.
The poll results suggest that Alaskans might view the dividend as a luxury to be distributed as long as the state is booming. If so, it is very different than how most basic income supporters view it: as an essential tool to promote social justice and an important way to show solidarity with economically disadvantaged individuals. Whether this or any other view of the dividend is strong enough to project it during Alaska’s fiscal crisis remains to be seen.
For more information see:
Alex DeMarban, “Poll: Alaskans prefer new revenue over deep cuts, including tapping Permanent Fund.” Alaska Dispatch News, August 13, 2015.
The Rasmuson Foundation, “Alaska Attitude Survey On The State Fiscal Climate.” The Rasmuson Foundation, Conducted July 13 – 21, 2015
Representative Wes Keller, “My Turn: Don’t be snookered, ther’es no ‘free ride.’” The Juneau Empire. August 20, 2015
Rep Les Gara, “My Turn: Open discussion needed on oil taxation.” The Juneau Empire. August 19, 2015.
NOTE: The paragraph beginning, “The first option might not sound like a cut…” was added after this article was first posted in response to questions from readers.
by Karl Widerquist | Aug 31, 2015 | News, The Indepentarian
Alaska Dispatch News has released its estimate of Alaska’s Permanent Fund Dividend (PDF) for this year. The Alaska Dividend is the closest policy to a basic income in the world today. It has paid dividends to all Alaska residents since 1982. According to reporter Sean Doogan, the dividend is likely to be about $2,100. If so, the dividend would be technically the largest in the state’s history. The next largest amount ever paid as “the Permanent Fund Dividend” was slightly smaller, $2,069, in 2008. In that year, however, the state added $1,200 to each check as a rebate from the state’s budget surplus, making the total amount each resident received $3,269, considerably higher than any likely amount this year.
The Alaska Dividend amounts 1982-2014
The amount is large this year because the investment fund on which it is based is doing well. The amount paid each year depends on how many Alaskans apply and on a five-year average of returns to the fund. The fund has been making strong returns in recent years. It has recently reached a total value of $52.8 billion. Although the fund was created out of out revenues and is supplemented by them each year, the value of the fund and dividend is not dependent on current oil revenues, which have been declining sharply from both lower prices and fewer exports.
Sean Doogan, “Our estimate of this year’s PFD check: $2,100.” Alaska Dispatch News, August 22, 2015
Catie Quinn, “Permanent Fund Adds 4.9%.” KSRM Radio Group, August 20, 2015.
APFC, “The Permanent Fund Dividend.” The Alaska Permanent Fund Corporation website.
Credit pciture: CC Teddy Llovet
