Category Archives: Posts by Alaskans for Sustainable Budgets

The Special Session version of “Implementing Governor Hammond’s 50/50 Plan”

At their request, we are discussing Governor Hammond’s 50/50 Plan and other current fiscal issues at this evening’s meeting of the Mechanical Contractors of Fairbanks.  This is the presentation.  While we have updated the numbers to reflect the most recent revenue and other forecasts, we have made the most revisions to the section headed, “Why it is important to keep the PFD at 50%” beginning on page 21 of the slidedeck.

While we continue to hope that the Governor, Senate and House ultimately will back down or otherwise be thwarted by the end of this session from their proposals permanently to cut the PFD, if they don’t this is the first draft of the version we anticipate using subsequently to support the effort to repeal that legislation by referendum should it pass.

Our response to Senator Kelly …

Earlier this week the Alaska Senate Majority started running a social media ad featuring a video of Senate President Pete Kelly advocating for the Senate’s proposed fiscal plan.  The Senate’s plan relies solely on PFD cuts to raise “new revenue.”

The purpose of the ad is to compare the Senate’s plan against the House plan, which relies on a combination of PFD cuts and an income tax to raise “new revenue.”  The ad focuses on the income tax portion and argues both that it is unnecessary and adversely affects “working Alaskans.”  The Senate’s ad is available here.

As readers of these pages will know, we oppose PFD cuts as part of a proposed “fiscal solution.”  Based on various analyses published last year and this by the Institute of Social and Economic Research, we have come to believe that cutting the PFD is the worst step to take from the perspective of the overall Alaska economy and working Alaska families.  It reduces overall Alaska income more than any other fiscal option, reduces both income and jobs more than any other “new revenue” option, increases poverty levels and income disparity more than any other fiscal option and as ISER concluded in an additonal analysis earlier this year:

A cut in PFDs would be by far the costliest measure for Alaska families.

As a result, after thinking about the Senate Majority’s ad, we put together our response.  Readers can play it at the video above, or on YouTube, here.

#KeepThePFD 3

This is the third piece in our a radio and social media campaign focused on urging legislators to retain the Alaska Permanent Fund Dividend as it currently is. The first two are here and here.

This piece is introduced in our social media campaign this way:

Economists tell us depositing the PFD directly into the pockets of Alaskans produces more Alaska income than if redirected to and spent by government. Simply put, we Alaskans produce more income — generate more money in the economy — if WE spend the money rather than government.

Alaska already is in a recession, if you agree with us that taking even more money out of the Alaska economy during these uncertain times through a PFD cut is the wrong step for Alaska, contact your legislator by email, text, by posting on Facebook or Twitter with one simple message — tell them you want them to KEEP THE PFD AS IT IS (a sample email and contact information for members of the legislature is available here: https://goo.gl/BT2BAz). Then, repost this video so that your friends do the same. For continuing updates and commentary on Alaska’s fiscal situation, like, follow and engage with us at Alaskans for Sustainable Budgets. #KeepThePFD

As we have discussed often on these pages, we believe retaining the PFD as it is, is an important part of developing a long term, sustainable Alaska budget and overall economy.  If you agree, please support the effort in the ways we describe in our social media post above.

Another from our Medium page: Reason № 3 behind why the Alaska economy is in a recession and potentially, about to get worse …

facepalmPublisher’s Note:  As readers of these pages may recall Alaskans for Sustainable Budgets also maintains a separate blog providing news & commentary on Alaska fiscal and economic policy on national website Medium.  The following piece appeared first on that website.  ______________________________

Yesterday in response to a question during the Fairbanks presentation of the Alaska Senate Majority’s Fiscal Plan Senator Click Bishop said that he had started talking to colleagues about developing an “economic stimulus plan” of various capital projects. The question and response begins at about 54:00 of the following video. Fortunately, I was sitting out of the frame, so my resulting facepalm is not recorded for posterity.

In many ways, Sen. Bishop’s response tells you all you ever need to know about why the Alaska economy is in the shape it is, and why it will become worse if either the current Alaska Senate Majority or Alaska House Majority Coalition fiscal plans are enacted.

Alaska already has what many economists view as an outstanding and long term “economic stimulus plan.” It’s the Alaska Permanent Fund Dividend (PFD). According to a March 2016 analysis by the University of Alaska-Anchorage Institute of Social and Economic Research (ISER), each $1 distributed as a PFD in Alaska produces about $1.40 in income in the overall Alaska economy. As “stimulus” packages go that’s an extremely good bang for the buck.

As significantly, according to the March 2016 and subsequent ISER studies the PFD also materially reduces state poverty levels and helps reduce income disparity, both also very important economic objectives.

But that program is troublesome to some because it puts the dollars — and economic decisions — in the hands of individual Alaskans, rather than government. So, rather than do whatever it takes to maintain the program during an increasingly serious economic recession, the majority caucuses in both bodies are currently proposing to curtail it severely and move roughly half of the dollars — and resulting control over how those dollars are spent — over to government, substituting instead things like Senator Bishop’s “economic stimulus plan” to help drive the economy. Continue reading

From our Medium page: If Alaska is going to implement PFD cuts, then it should implement a state income tax also …

2016_03_30-ShortrunEconomicImpactsOfAlaskaFiscalOptions (p. III-9)

Source:  Institute of Social & Economic Research, “Short-run economic impacts of Alaska Fiscal Options” at III -9.

Publisher’s Note:  As readers of these pages may recall Alaskans for Sustainable Budgets also maintains a separate blog providing news & commentary on Alaska fiscal and economic policy on national website Medium.  The following piece appeared first on that website.     ______________________________

Let’s be clear on this to start. We oppose state income taxes.

We oppose them for the same reason that others will assert as well, because of the adverse effect on the Alaska economy and families.

But let’s also be clear about something else, if that is your reason for opposing an income tax, then you should have opposed the PFD cut as well. Why? Because, according to ISER’s March and October 2016 studies, cutting the PFD has a larger adverse impact on overall Alaska income and jobs — the Alaska economy and families — than an income tax. Continue reading

#KeepThePFD 2

As we mentioned in a post last week we have started a radio and social media campaign focused on urging legislators to retain the Alaska Permanent Fund Dividend as it currently is. The ad above is the second in the series (the first is here). The audio is the radio campaign ad.

The second ad is introduced in our social media campaign this way:

We believe the full PFD should stay in the pockets of Alaskans rather than be used by government to help fund special interests. If you agree, contact your legislator by email, text, by posting on Facebook or Twitter with one simple message — tell them you want them to KEEP THE PFD AS IT IS (to help get you started, a draft of an email and contact information for members of the Senate and House is available here: https://goo.gl/BT2BAz). Then, repost this video so that your friends do the same. For continuing updates and commentary on Alaska’s fiscal situation, like, follow and engage with us at Alaskans for Sustainable Budgets. #KeepThePFD

As we have discussed often on these pages, we believe retaining the PFD as it is, is an important part of developing a long term, sustainable Alaska budget and overall economy.  If you agree, please support the effort in the ways we describe in our social media post above.

#KeepThePFD

As the next step in our efforts, yesterday we started a radio and social media campaign focused on urging legislators to retain the Alaska Permanent Fund Dividend as it currently is.  The ad above is the first in the series. The audio is the radio campaign ad.

The social media campaign is introduced by this post:

We believe the full PFD should stay in the pockets of Alaskans rather than be used by government to help fund special interests. If you agree, contact your legislator by email, text, by posting on Facebook or Twitter and tell them you want them to #KeepThePFD. Their contact information can be found at http://akleg.gov. Then, repost this video so that your friends do the same. For continuing updates and commentary on Alaska’s fiscal situation, like, follow and engage with us at Alaskans for Sustainable Budgets.

We are taking this step because, for the reasons we have explained on these pages, we believe strongly that the Alaska legislature is headed in the wrong direction on this issue and are willing to put our money where our mouth is.

Our comments on the proposed House Operating Budget (HB 57) …

CommentsOver the weekend we prepared and submitted our comments to the House Finance Committee on the proposed House Operating Budget (HB 57).  Here was the summary:

Alaska is currently in an economic recession. We believe consideration of that fact should drive the evaluation this session of every bill touching on the state’s economy. Things that adversely affect the state’s overall economic situation — or unfairly treat some Alaskans economically compared with others — should either be amended to avoid those effects or rejected.

HB 57 certainly is one of those bills that touch on the state’s economy.

For the reasons explained below, we believe that, in its current form, HB 57 both worsens Alaska’s overall economic situation and unfairly treats some Alaskans. In other words, we believe that HB 57 worsens the recession for both Alaska and Alaskans.

In order to avoid those effects, we believe that HB 57 should be amended in certain respects.

Our full comments are here:

Comparing the impact of SB 70 v. HB 115 on the overall Alaska economy …

comparison-of-sb-70-v-hb-115-2-27-2017
Last Friday, the Alaska Senate Majority introduced SB 70, a new bill which proposes to address Alaska’s fiscal situation. Like HB 115, the version being considered in the House, the Senate version relies heavily on cutting the Permanent Fund Dividend (PFD) in order to raise “new revenue.” Unlike the House version, the Senate version does not also contain an income tax component.

Because no one else is, we have started scoring the effect of various fiscal proposals on the overall state economy. As we explained in a previous piece last week scoring HB 115 (“Scoring the effect of HB 115 on the overall Alaska economy”, Feb. 20, 2017), we are doing so using the factors developed last year in two studies done by economists at the University of Alaska-Anchorage’s Institute of Social and Economic Research (ISER).

Our basic methodology is described in the February 20th piece. It measures the effect on the overall Alaska economy of the proposal being scored in four areas: jobs, income, poverty levels and income disparity. Especially given that Alaska is in the midst of a recession, the purpose of the scoring is to determine whether the proposal moves the overall economy forward or backward. Continue reading

Why Hammond 50/50 works …

When asked about alternative proposals to address Alaska’s current fiscal situation that are founded on using Governor Hammond’s original vision for the Permanent Fund, the current Administration and, now, apparently, the Senate Republicans are falling back on the same mantra — “the numbers don’t work.”

Well, the numbers do work and we capture the reasons why in this slide deck.  Use the right revenue forecast, start using the “other half” of the annual revenues from the Permanent Fund for the purpose intended by Governor Hammond (to help fund “essential government services”), view and use the accumulated amount in the earnings reserve account for what it was originally intended (as a savings account to help fund “essential government services” during low points in the oil price cycle) and maintain total UGF spending at last year’s $4.3 billion (the sustainable budget number) adjusted going forward for inflation and population change (growth or decline) and Alaska’s fiscal situation stabilizes, without PFD cuts or taxes.

Going further, by cutting the PFD as the Administration (SB 26), House Majority (HB 115) and now Senate Majority (SB 70) have proposed and, in some instances, imposing additional taxes on top of that (as the Administration and House propose) leads to even more erosion in overall Alaska income, huge increases in statewide poverty levels and vastly increased income disparity between high income Alaskans on the one hand, and middle and low income Alaskans on the other.

In short, all three bills make Alaska’s overall recession worse, and in Alaska’s version of Simon Legree, focuses its most harsh effects on those who can afford it least.

We outline why Governor Hammond’s 50/50 vision works, and the adverse effect on Alaskans by going further, in this slide deck from last week’s presentation at one of the World Trade Center Anchorage’s periodic “Meet & Brief” luncheons.  We encourage readers to review it if you haven’t before, and to share it if you agree with the approach and want others to be aware of it as well.

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This post first appeared on Alaskans for Sustainable Budgets, a blog focused on News & Commentary on Alaska fiscal and economic policy on national website Medium.