Alaskans for Sustainable Budgets Founder Brad Keithley will be publicly discussing the need for and implementation of Governor Hammond’s original 50/50 plan for the use of earnings from the Permanent Fund two times over the next two weeks.
The first will be tomorrow (Wednesday, December 7) at the monthly luncheon of the Fairbanks Chapter of the Alaska Support Industry Alliance, https://goo.gl/Yl9jJj. The second will be as part of a panel discussion next Monday (December 12) afternoon during Law Seminars International Annual Two-Day Conference on Alaska Energy Markets and Regulation, https://goo.gl/ZaYPW5.
In Diapering the Devil, Governor Hammond described his vision for the use of Permanent Fund earnings this way:
“I wanted to transform oil wells pumping oil for a finite period into money wells pumping money for infinity. … [Once the money wells were ‘pumping money,’ in other words, producing earnings] 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.”
While the first (“transform oil wells ..into money wells”) and second (“each year one-half of the account’s earnings would be dispersed among Alaska residents”) pieces of the vision have long since been implemented, the third (“the other half of the earnings could be used for essential government services”) never has.
In the past a large portion of the “other half” — the portion intended to help fund “essential government services” — has been used to so-call “inflation proof” the Permanent Fund. But this past spring, Permanent Fund Corporation Executive Director Angela Rodell admitted in legislative testimony that “[i]nflation proofing as designed forty years ago is not as necessary today. … [i]nflation proofing … is no longer necessary for preserving the purchasing power.” (Minutes of Feb. 16, 2016 meeting of Senate State Affairs, https://goo.gl/AOLwbr at 10:23:47am; see also https://goo.gl/wpXDkh for additional discussion of the issue).
With that use now in the past, there are no impediments to reverting to Governor Hammond’s original design. According to Keithley, the financial impact would be significant, reduce the need for other sources of so-called “new revenue” and eliminate entirely the need for modifying the second part of Governor Hammond’s vision — the PFD.
“Using a portion of the Permanent Fund earnings stream always has been part of developing a long-term sustainable budget,” Keithley said. “But that doesn’t need to be — and at least in my view, never has contemplated — cutting into the dividend. As Governor Hammond intended, that’s what the ‘other half’ is for.”
As a former business executive, lawyer and consultant, Brad Keithley has over 35 years experience working on oil, gas and fiscal issues. He now focuses most of his time on Alaskans for Sustainable Budgets, a grass roots effort to restore fiscal responsibility and stability to the Alaska government and economy.
Slide decks used at each presentation will be posted on these pages following the presentation.