Leg With Louie: The Awesome Power of the Dividend

Without an income tax and/or a change in oil taxes we cannot have an adequately funded state government and a full statutory PFD at the same time, at least I think we cannot. Please correct me if I am wrong. My kids heard about 3K Dividends and went spinning around the yard like Sufis with visions of new phones, video games, downhill skis. I excel at dashing their dreams, so I told them to face reality, the math doesn’t work - brace for a small payout (we will inevitably use any small payout to fund a winter vacation).  

The legislature is working on a Rubix cube of immense consequence as it negotiates a deal to end the special session. A lot of public anger buffets it, whipped up by the Administration. I have sympathy for the members of the Alaska State Legislature who are on the receiving end of the weapon that is the Permanent Fund Dividend. It is a truly effective defense mechanism. It makes people go crazy with rage at the thought of anyone touching their money.  

The awesome power of the Dividend repels me. It gets people elected to high office you wouldn’t usually trust to drive your Uber from point A to point B. It injects a strange, strong poison of self-interest into our political enterprise. I am drawn to its logic, and am proud of its architects and believe it is ultimately a good thing despite being revolting. Also, I will gladly accept a 9K payout for the family this year, and shed a crocodile tear while veering around potholes on highways without troopers, to take my kids to a consolidated K-12 school with ATCO trailers and Quonset huts for classrooms.

I don’t see a clear way to 3K without substantial draws from savings, or significant cuts to service. We need new revenue. Senator Bill Wielechowski has fought a lonely battle to re-examine our per-barrel oil tax credit structure - but the other members of the group Defenders of the Permanent Fund should be a more significant presence in the fiscal solution arena. I respect them all and would love to see some of these distinguished folks use their influence to pass an income tax and/or eliminate per barrel credits. Advocacy in defense of the Permanent Fund(PF) is wholly incomplete without some path toward new revenue solutions without which the PF is ultimately a goner by attrition, and the PFD becomes a fond little memory.  

It is also rumored to be one of the binding agreements in the House Majority caucus not to advance changes to the oil tax structure. This is ridiculous if true, and is a self-imposed complication though likely practical considering the delicate balance of powers in the coalition.  

3K is a sweet thought. As the sweet summer descends on Juneau, the legislature could put a cherry on top by proposing the original Dunleavy campaign promise of a double dividend (6K!!) contingent on the passage of an income tax and reductions in oil tax subsidies.  

Louie Flora
Government Affairs Director

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We have to be realistic. We need revenue.

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