Resource Development Council

A Message From The Executive Director

Jason Brune

The Permanent Fund Dividend Needs to GO

We’ve long heard that what Alaska needs is leadership or more big ideas. Well, I’m feeling a little feisty after the special session and as the holidays approach. For the sake of discussion and to maybe begin to change how we think about some of the issues in front of us, I am going to tackle a sacred cow—right here and in full public view. I might be crazy but here goes.

The Permanent Fund Dividend needs to go. It doesn’t pay me nearly enough and I’m tired of being short-changed. I want my fair share!

To get my fair share, I think the State of Alaska should take a page out of the Alaska Native Claims Settlement Act (ANCSA). In ANCSA, all net profits from natural resource development on Native Corporation lands are split between the larger regional corporations and the smaller village corporations. If we followed this example using only royalties, the State of Alaska would get half, and the people would get the other half. We would get our fair share once and for all!

How much would this be? Well, mineral royalty deposits to the Permanent Fund were $601 million in 2006. As is required in our state constitution, this amount is only 25% of all royalties paid to the State of Alaska. So, under this idea, the amount of money available for Royalty Checks to each and every Alaskan would be $1.2 billion. This would have provided Royalty Checks of $1,989.57 to each and every Alaskan this year—20% greater than our Permanent Fund Dividend checks of $1,654.00.

Indeed, as Alaskans responsibly develop more of their natural resources for the constitutionally mandated “maximum benefit of the people,” our Royalty Checks would grow. Our legislators would pass laws and put smart tax policy in place to encourage resource development. As we encourage more investment in this state, more resources will be discovered and developed, and subsequently, our Royalty Checks would grow.

In fact, more Alaskans would actively support the development of our natural resources since they would directly benefit as their Royalty Checks grew. They would speak out in favor of projects rather than sitting back and letting outside environmental organizations or wealthy landowners dictate public opinion with negative ad campaigns. We could see Alaskans getting behind all sorts of responsible projects as we benefit through increased Royalty Checks.

What are some recent examples that might have gone differently if we were all receiving Royalty Checks from development on state land? Well, for one, coalbed methane may have been developed in the Mat-Su. This natural gas would not only have benefited Southcentral Alaska as it strives to find new gas supplies and lower our utility costs, but its development would have increased each and every Alaskan’s Royalty Check. How about Pebble? Well, at the bare minimum, Pebble would be allowed to go through the permitting process without being judged and executed before even submitting a mine plan. I could go on, but I won’t.

One offshoot of all of this effort to increase our Royalty Checks would be that more jobs would be created. With more jobs comes a larger, more diversified tax base for local communities to use to help fund education and become less dependent on the state.

What problems exist with this idea? Well, the first that comes to mind is there would be $602 million less for the state. Seems ok by me, especially since the recent increase in oil taxes that was just passed will generate over five times that amount in new revenue. Problem solved.

Meanwhile, the Permanent Fund and its investment income could be used for something more of a public purpose, like creating educational opportunities for Alaskans to go to college for free if they graduate from high school and work in Alaska afterwards one year for every year of college the state paid for. Or, it could be used to help us establish a more stable spending base for state government into the future. Regardless of how we decide to use it, the earnings from the Permanent Fund would no longer be viewed as a cash entitlement for Alaskans through the Permanent Fund Dividends—that burden would shift to our Royalty Checks.

The sacred cow in this state would shift from the Permanent Fund Dividend Checks to the Royalty Checks. When running for office, politicians would be asked, “What will you do to increase my Royalty Check?” In other words, they would be asking what they would do to increase economic activity in this state.

Royalty Checks rather than Permanent Fund Dividend Checks will solve a lot of problems and create enormous opportunities in our state. Each and every Alaskan would continue to receive an annual check, but this one would be linked to economic activity in the state rather than on how the stock market is doing.

As Alaska prospers, Alaskans prosper. Seems fair to me.