Like most of us, I was moderately surprised when Senate Republicans rejected Representative Laddie Shaw’s nomination to replace the sadly departed Chris Birch. Suzanne Downing in Must Read Alaska named Senators Giessel, Coghill, Stevens, Stedman, Bishop and Von Imhof as no votes.
I know a lot of these folks and asked three of them if they voted against the nomination and if so, why. Senators Giessel and Coghill did not respond. Senator Von Imhof did with a note that made the point that her biggest concern was “… honoring the voters’ intent in the 2018 election.” She went on to justify her vote with vote counts for Governor Dunleavy, Chris Birch and Laddie Shaw. She did not like Shaw’s support of the statutory dividend (PFD) while the budget still needs to be balanced, so I suppose she had her excuse.
Next person I asked was Laddie Shaw, who sent me a 9/30 statement from the Permanent Fund Corporation showing the total value was $66.3 billion. $47.8 billion in principal. $18.4 in the earnings reserve. And the fund made $6.2 billion over the last year as of June 30.
From this, the senate majority somehow believes that they cannot pay the full statutory PFD. Note that not a single one of these Republicans ran in support of Bill Walker’s theft of the dividend payout. That action was supported by the Alaska Supreme Court.
Why did Walker do the veto? He has for years railed against the PFD and was never a public supporter of it. A real cynic (and I wear that mantle well) would opine that Walker was simply looking around for free money to fund his personal white elephant (or Great White Whale), the in-state Alaska Natural Gas Pipeline. He created that pot of free money in the earnings reserve by cutting the PFD in half. A look at the dollar amounts in play is instructive. Source for the figures is the Alaska Permanent Fund performance page and the Alaska PFD Wiki.
| Year | PFD Paid | Actual PFD | Earnings Reserve | Notes |
| 2015 | $2,072 | $2,072 | $7.1 billion | Last full PFD |
| 2016 | $1,022 | $2,052 (est) | $8.6 billion | Walker veto |
| 2017 | $1,100 | $2,300 (est) | $12.8 billion | Walker veto + legislature |
| 2018 | $1,600 | $2,700 (est) | $18.9 billion | Walker veto + legislature |
| 2019 | $1,606 | $3,000 (est) | $18.5 billion | Legislature |
Note how the earnings reserve ballooned by at least $1.5 billion the first year Walker vetoed the full PFD in 2016? Note that since that time, the value of the earnings reserve has increased by a factor of 2.6 to over $18.5 billion? Walker just created the money he needed to start construction of his white elephant.
Sadly, there were other people watching with their eyes on the quickly growing pot of free money. These included all elected democrats in the state. Unfortunately, it also included a number of elected Republicans, those who chose to caucus with democrats in the House and those who rejected Laddie Shaw’s nomination in September.
While I can’t do a lot about the democrats other than work for their defeat next year, I can and will most certainly do something about elected Republicans who no longer have the stomach to balance the state budget without dipping into the PFD.
Whether a $3,000 PFD is too much or not is irrelevant. Any smaller number is by definition arbitrary. Worse, refusal to pay it out is failure to follow state law. If the senate majority wants to get their hot little hands on the earnings reserve, there is a path out there that I will support.
I support the full PFD for two reasons. First, it is statutory, locked in via state law, law that everyone understood and agreed with until Bill Walker with the assistance of the Alaska Supreme Court changed it. Second, I view the statutory PFD as leverage to force a reluctant and recalcitrant legislative majority in both houses to control spending and the size of government. My fear is that without this forcing function, this public discomfort, there will be nothing to enforce spending discipline.
Solution? I have written about this before and will again. I see it as a 3-step process. First is to pay the full statutory PFD if for no other reason than to restore trust in our elected legislators. Second and third should be simultaneous. Second would be to pass a constitutional amendment instituting a hard spending cap for Alaska government. At the same time, we can discuss a change in the statutory dividend formula. I’ll help pass it. The end result is a smaller, sustainable government.
Message to all the wannabee Bill Walkers out there gleefully rubbing their hands together in hopes of getting them on the $18.5 billion in the earnings reserve, is we can do the same thing to you that we did to Bill. And we will.
Final observation about the senate majority is that I thought it was a cute move delaying your consideration of Governor Dunleavy’s nomination of Representative Josh Revak to replace Chris Birch until the first week of November. This allowed another round of fundraising and removed the governor’s ability to call a third special session. Cute. I am looking forward to that vote and the very real possibility that you will tell all Republican voters in Senate District M that their representatives aren’t up to your august standards. Maybe that’s why Don and Dan got themselves involved.
Alex Gimarc lives in Anchorage since retiring from the military in 1997. His interests include science and technology, environment, energy, economics, military affairs, fishing and disabilities policies. His weekly column “Interesting Items” is a summary of news stories with substantive Alaska-themed topics. He was a small business owner and Information Technology professional.
