In discussing the purpose behind the creation of the Permanent Fund and later the Permanent Fund Dividend former Governor Jay Hammond outlined a very simple, two part plan:
The first related to the creation of the Permanent Fund itself:
I wanted to transform oil wells pumping oil for a finite period into money wells pumping money for infinity. …
The second focused on what to do with the earnings, once the “money wells” were pumping:
Each year one-half of the account’s earnings would be dispersed among Alaska residents …. The other half of the earnings could be used for essential government services.” Diapering the Devil, https://goo.gl/FFTi9M at 15, 19.
Through Constitutional amendment (Art. 9, Sec. 15, https://goo.gl/rSxZ9n) and statute (AS37.13.145, https://goo.gl/rfScqh), the state has implemented the first and the first half of the second (“one-half of the account’s earnings would be dispersed among Alaska residents”) parts of the plan.
The state never, however, has implemented the second half of the second part of the plan (“The other half of the earnings could be used for essential government service.”). Instead, the state repeatedly has drawn on savings when it has needed supplemental sources of money to fund essential government services rather than turning to the “other half” of earnings.
Now that some have suggested the use of savings should be reduced — and replaced by taking money from the state’s private economy through PFD cuts and/or taxes — we have examined what it would take to implement the final step of Governor Hammond’s 50/50 plan. Continue reading