This implies that PFDs are tied to oil prices. But that’s not what the Alaska statutes say. Instead, the Alaska statutes specifically tie the PFD to “income available for distribution” from Permanent Fund income.
We understand that in a 2017 decision, the Alaska Supreme Court said that the Governor using his veto or, by implication, the Legislature could overrule the law in any given year during the process of appropriation, diverting revenue intended for the PFD. for other uses.
But that ruling didn’t overturn the law, it simply said the governor could veto or the legislature allocate the money for other uses.
Mr. Marrs’ article implies that such PFD diversions — what some call PFD reductions — are good for Alaska.
But that’s not what economists who have studied the matter have concluded.
A 2016 study for the legislature by economists at the Institute for Social and Economic Research (ISER) at the University of Alaska Anchorage found that because “the impact of PFD reduction falls almost exclusively on residents, and that it’s highly regressive…it has the greatest impact.” negative impact on the economy per dollar of revenue raised” of all the different financing options.
A 2017 follow-up study by one of the co-authors of the 2016 study concluded that, again of all the different financing options, “a reduction in PFDs would be by far the most costly measure for Alaskan families”.
And as noted in an Anchorage Daily News article at the time, in a separate 2017 study for the Legislature, the Institute on Taxation and Economic Policy (ITEP) found that “cutting dividends from the Alaskans Permanent Fund would hit middle-income Alaskans more than three times harder than a graduated income tax that would raise the same amount of money….Even upper-middle-income Alaskan families—those in their 60s to Top 80%… – would be slightly harder hit by the dividend cut.
We understand from both ISER and ITEP studies that due to the significantly lower impact on them, the top 20% earners benefit from using PFD discounts instead of taxes, and therefore strongly oppose the adoption of taxes to pay for government services.
But as the title of the 2017 DNA story reports, “for most Alaskans, an income tax would hurt less than a reduction in PFDs.”
Although not in Mr Marrs’ article, sometimes those in the top 20% also claim that while they are deeply regressive – meaning they have a greater impact on low- and middle-income families than on high-income families – PFD reductions are nevertheless justified because “low-income Alaskans are more dependent on government services.
But we’ve never seen an economic study that demonstrates this, and it’s certainly hard to imagine anyway that low-income families in Alaska use 9 times more, lower-middle-income families use 4 times more , middle-income families 3 times more, and even upper-income families middle-income families 2 times more than those in the top 20%. These are the multiples found by the 2017 ITEP study on the impact of PFD reductions on families in these brackets compared to those in the top 20%.
We understand that sometimes government spending – or the amount saved for future use – exceeds traditional income. We could reform spending and align the government’s budget with currently available revenues, but we have seen no political will to do so. So when additional expenses occur, all Alaskan families should be required to contribute equitably to make up the shortfall, and not, as happens by balancing the difference through PFD reductions, forcing families middle and low income to bear a disproportionate share of the burden.
While the legislature’s decision to use PFD reductions may be good for the top 20%, disproportionately affecting middle and lower incomes — the remaining 80% — of Alaskan families, it failing them and, as the 2016 ISER study concluded, the entire Alaskan economy.
Michael Dukes is the host of The Michael Dukes Show, which airs across Alaska on radio stations. Brad Keithley is the executive director of Alaskans for Sustainable Budgets, a project focused on developing and advocating for economically robust and sustainable state fiscal policies.