Clearing up Alaska's Budget Oversimplifications
By John McDowell
July 22, 2018
With the current political climate, I expected the divisive rhetoric of this election season. I did not expect the battle lines to be drawn so explicitly between the talkers and the doers.
Those who stayed on the sidelines when the state fell off the fiscal cliff now condemn those who fought to get Alaska back on track. And in rallying against the fiscal plan and restructured dividend, opposing candidates rely on a set of myths so often repeated that sometimes we forget to question them.
I would like Alaska's voters to be able to take a moment to think about the most prominent fabrications and oversimplifications of the fiscal plan compromise, so that we can all remember the true version — not the soundbite version — of what has happened to Alaskans' Permanent Fund dividends.
Myth #1: The Governor "stole" half your PFD
When Gov. Walker entered office, the state was in the middle of a fiscal implosion. The deficit grew to $3.7 billion, the state credit score was downgraded again and oil cratered to $26 per barrel. Our state politicians had no answer. The Legislature was stuck in a partisan logjam that burned through $14 billion in savings and would have killed off the dividend completely by 2020. It is a testament to how far we have come that people have forgotten how bad it was.
If you want to blame something for a smaller PFD, blame legislative gridlock and the expectation that Alaska could fund government, the economy and the dividend with the revenue from a single, non-renewable resource. Blame the politicians who, year after year, kicked the can down the road, prioritizing party popularity over Alaska's future.
Gov. Walker and legislators who passed Permanent Fund earnings reform reduced the deficit by 80 percent and restored Alaska's credit rating. This year we will pay out one of the highest PFD checks in Alaska history, at $1,600, and more importantly: The restructure has stabilized our finances so that the dividend can continue to grow, and our children can enjoy it into the future.
Myth No. 2: Your PFD was wasted on excessive state spending
Many Alaskans do not know where the money from the PFD restructure went. This makes it easy for politicians to vilify the restructure decision and claim dividend money was spent on wasteful government services.
One hundred percent of the money that was capped out of the dividend, went back into the fund to grow it. It's as if we had $20, and instead of giving out all of it, we paid out half and invested the other half, so that we could keep paying out $10 checks for years to come.
State spending has been reduced 44 percent since 2013, its lowest level in 15 years. This administration closed 40 state facilities and eliminated thousands of state positions. Government is currently operating at reduced capacity, and "excessive state spending" is an anachronism. That is why when you hear candidates call for more cuts, you won't hear them outline specifics.
Myth No. 3: Begich/Dunleavy can bring us full dividends, safer communities, better schools and slash spending
This is the promise of the two top candidates in either party. They have no plan for sustaining the permanent fund with record-high dividends, nor for maintaining needed services with a reduced budget. Mark Begich, strangely, wants to dismantle criminal justice reform. Mike Dunleavy wants to rip the guts out of our rural school systems. There's no reason to believe their promises.
There is more to these fictions than the usual campaign blustering. It is wrong for politicians to ignore complicated fiscal realities in favor of presenting the public with cheap quips. It is wrong to disparage those who have stayed on the field, when you have avoided every opportunity to get your hands dirty.
But more than any of that, it is wrong to tell Alaskans who gave up short-term comfort now for a more stable future that they were duped and ripped off. There were many of us who, out of pride for our state, were willing to take a smaller check in the short term to pass on a better Alaska to our kids. It is wrong to tell us that pride was misplaced.
John McDowell is a U.S. Air Force veteran and a retired member of Alaska Railroad Workers Local 183, where he worked 28 years on the Alaska Railroad.