A new kind of news-documentary interactive presentation has been delivered by Frame, a digital newsmagazine that uses human-centered stories to illuminate key topics in the news. Its latest issue features the Alaska Permanent Fund, named “The Alaska Model”.
The piece tells the story of the creation of Alaska’s universal basic income-style Permanent Fund Dividend and the tense backroom dealings that went into its passage. The story offers a fresh angle — a firsthand account from one of the dividend’s chief architects — delivered in a unique, interactive documentary format.
It seems that the Alaskan tax policy is being too generous with oil companies. On top of the fact that there is no income or value-added tax (VAT) in Alaska, every year oil companies operating in Alaska are granted wealthy tax credits, this year amounting to $1.2 billion. That is roughly the amount of the state’s deficit, for the reduction of which governor Mike Dunleavy now has a plan to slash $440 million, as reported before.
Under the referred plan, features a 40% cut in the University of Alaska funding, a $58 million reduction to the state’s Medicaid program, and considerable slashes to several social security programs. That or the Alaska Permanent Fund (APF) gets cut in half. The professed need to perform these draconian cuts flies in the face of the inexistent tax policy in Alaska, a clear ultra-liberal state of affairs which mainly benefits oil companies operating in the State.
State Senator Bill Wielechowski, a long-time APF defender has recently introduced a bill aimed to eliminating the unjustified tax credits to oil companies, but hasn’t got much support until now. One reason for this is that, traditionally, Alaskans are pretty averse to taxation, no matter who or what is targeted by it. However, scrapping these enormous tax cuts and introducing income and consumption taxes could be, in the long term, the only viable road to provide middle-class and lower income Alaskans the social security spending they need, and the APF unconditional payment they deserve.
More information at:
Tim Higginbotham, “Don’t Blame the Alaska Permanent Fund Dividend”, People’s Policy Project, July 18th 2019
André Coelho, “United States: Alaska’s desperate governor considers massive cuts to university budget to keep Dividend”, Basic Income News, July 9th 2019
Mike Dunleavy, sitting on top of an oversized Alaska Permanent Fund Dividend check. Picture credit to: Anchorage Daily News.
Basic income yes, but not at any cost. The alarm comes from Alaska, where governor Mike Dunleavy has announced cutting his 2020 state budget by as much as $410 million, one-third of which will fall upon the University of Alaska. To the University, that represents 41 percent of its own annual budget, which means that, if applied, these cuts would render the state’s university unrecognizable. Dunleavy calls this move a “policy choice” linked to his professed promise to increase the Permanent Fund dividend Alaskans benefit each year.
Arguably, consequences for the Alaskan economy, and particularly for the state university, would be devastating.
The University President, James R. Johnsen, has stated that this “will strike an institutional and reputational blow from which we may likely never recover.” And the implications for the wider Alaskan economy and even throughout the world may be far reaching since research has shown that investing in universities has considerable positive effects on the economy, and also because the University of Alaska is a core centre of research for Arctic issues. This is particularly important these days, in the middle of a climate crisis).
These budget cuts from Dunleavy’s Office are, however, rooted in a deeper rationale and tradition. That is because politics in Alaska of late have been largely tied to oil money, and the collection of taxes has been scarce, or nonexistent.
Michael Howard, professor at the University of Maine and specialist in basic income related policies, has stated on Facebook:
“A better framing of the problem in Alaska would include Alaska’s lack of an income tax, reliance on oil revenue to fund state government, and the steady decline of the oil revenue. Alaskans don’t have to abandon the dividend in order to fund the University. They just need to pay income taxes like people in most other [US] states. However, this story does vividly illustrate that universal cash payments in practice always need to be evaluated in comparison to the competing policies for government spending and the budget constraints. Slashing the university budget by 41% ought not to be an option.”
More information at:
Cas Mudde, “Alaska’s governor is trying to destroy its universities. The state may never recover”, The Guardian, July 6th 2019
Alaska’s House of Representatives has passed a bill which sets the state’s annual PFD (Permanent Fund Dividend) at approximately $1,600 per person next year, an amount which has been confirmed after a hard-fought legislative battle over the size of the payment.
The PFD, which is funded largely out of oil revenues, has been reduced for the past couple of years due to low oil prices. In 2016, the payment, which had previously risen to about $2000 in 2015, was cut to approximately $1000.
In late March of this year, the Alaskan House of Representatives voted 21-19 to provide a dividend of about $2,700 per person, but after much debate this was reduced to the current figure of $1,600.
The bill will now go to Alaska’s Senate for further consideration.
Edited by: Dawn Howard
Alaska’s provision of regular, unconditional income to its inhabitants has had no overall effect on employment, a recent study has found.
The Permanent Fund Dividend (PFD), provided by the Alaskan government to all citizens who apply for it, currently stands at approximately $2000 per person per year. The authors of the study have indicated that, although this seems a small amount, the fact that it is applied regardless of age means that a two-parent family with two children could claim $8000 per year, which is considerably more substantial.
The study was carried out by Associate Professor Damon Jones of the University of Chicago’s Harris School of Public Policy, and Assistant Professor Ioana Marinescu of the University of Pennsylvania School of Social Policy and Practice. Jones is a Faculty Research Fellow at the National Bureau of Economic Research, while Marinescu has had her research published in a number of peer-reviewed journals.
Claims have previously been made that the provision of a universal basic income such as the PFD would tend to discourage participation in the workforce. However, the studies which seemed to support this have been based on situations where the money provided was given only to a small group of people. Jones and Marinescu posited that, in a situation where unconditional funds are provided to a large population, effects on employment could differ.
The study did in fact find that there was no overall decrease either in employment or in overall hours worked. The authors suggest that one reason for this could be that the PFD recipients, in spending their additional funds, are indirectly increasing the need for extra employees to provide goods and services to them.
The only significant change found by the study was a 17% increase in part-time work. Given that a greater percentage of women than men appeared to be taking up part-time work, it is possible that this change may have been, at least in part, the result of women using the extra funds to provide childcare, without which they would have been unable to remain part of the workforce.
The study was reported in a number of news outlets, including the New Yorker.
Alaska’s Permanent Fund originated in the 1970s, with a sudden influx of money due to revenue from newly exploited Alaskan oil reserves. Following concerns that a corresponding increase in government spending could be unsustainable should the amount of oil revenue decrease, the Permanent Fund was established, receiving 25% of “all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State”, according to the wording of the relevant amendment to the Alaskan constitution.
The Permanent Fund Dividend was first provided in 1982, when it was only a few hundred dollars per person. It has since increased at an approximate rate of $500 per decade.
Edited by: Dawn Howard