Gov. Walker’s “Bah Humbug” Christmas Gift to Alaska’s Children: Stealing Your Permanent Fund to Permanently Fund Socialistic State Government

EVERY ALASKAN OWNS A SHARE OF VAST NATURAL RESOURCES

ALL revenue from development of AK Natural resources (not just the Permanent Fund (PF)) is ultimately ‘owned’ by Alaskans who are ‘shareholders’. The legislature (not the Governor) has the sole constitutional responsibility to use, develop, and conserve natural resources for the maximum benefit of the people (Art. 8 AK Const.) This unique constitutional structure creates common property that in a socialistic government would be controlled and used for maximum benefit of whomever is politically in control of the government. Because Alaska is a constitutional republic, with all the benefits of the US Constitution, we value the inalienable right to own and protect property. “Ownership” of common property in a republic has not been thoroughly defined because the Alaska Constitution created this novel concept, and it is a product of legislation and history. The Constitution is clear the use, development and management of natural resources natural is for the “maximum benefit” of Alaskans as determined by the legislature, but “maximum benefit” could be defined as all ‘cradle to grave’ government programs on the one hand, or cash dividends on the other.

OUR BUDGET SHORTFALL IS FORCING US TO CLARIFY THE MEANING OF “OWNERSHIP”

Due to the current budget crisis, the legislature must further define the balance between socialism and personal property ownership of natural resource revenue. Constitutionally, most natural resource revenue goes directly into the General fund (GF) (the state ‘checkbook’) to be appropriated by the legislature subject to the budgetary process. This is a unique (radical?) creation. Uniquely, we also constitutionally put a smaller portion of natural resource revenue into an account that cannot be spent directly by the legislature, the Permanent Fund (PF). (Art 9 AK Cons.) The legislature, in turn has appropriated a dividend (PFD) and this becomes individual personal property with all the constitutional property ownership protections. It is important to note that the PF is created by the highest law (the Constitution) while the PFD is subsequently created by the legislature, under constitutional authority. The PFD changes common property (PF) to individually owned property where we understand better what the rights of ownership are.

DEFINITION OF ‘Taxes’

The differences between traditional taxes and ‘taxes’ on commonly owned property is also unclear. We do not commonly call the oil money going directly into the GF ‘taxes’, but rather just “oil revenue”, a habit which unfortunately clouds the source (Alaskans). In Alaska a full 90% of our GF comes from this ‘tax’ on commonly owned property. In Alaska, we do not have an array of broad base state taxes like other states because of this unique constitutionally authorized ‘tax’. Alaska has taken in about $112,825,000,000 (~113 billion) dollars from the sale of oil in the era of TAPS (Trans Alaska Pipeline) This 113 Billion dollars is comparable to the billions of tax dollars collected by other states as conventional taxes. A common fallacy is that Alaskans get a ‘free ride’ because we don’t pay a State income, sales, or property tax. In reality, our ‘tax’ contribution is collected out of our share of natural resources and is based on the success of production as opposed to, in other states, the citizen’s tolerance of taxes. We tolerate this comparatively huge ‘tax’ partly because we find it difficult to believe state residency could possibly include such a massive individual asset and responsibility. Nonetheless, it is true. Our response is similar to getting an “easy” inheritance and not believing it. We had better believe it, because we have the responsibility and the means to manage it for our children and grandchildren.

REAL RETURNS TO ALASKAN SHAREHOLDERS

Only the legislature, under authority of the Constitution, can codify the meaning of “maximum benefit” as it appropriates GF dollars each year by way of the annual budget process. Again, the only money NOT available to the legislature to appropriate is the constitutionally separate PF (Permanent Fund). The earnings from investment of the PF are not in the PF and are placed in an account in the GF (as prescribed in the constitution). That account is called the “Earnings Reserve Account” and it’s balance reflects the success of the investment board and the amount available for PFD checks. It is a very significant fact that for over 40 years, over the lifetime of the PF, the legislature has treated the Earning Reserve Savings Account with the same deference as it does other personal private property. The Earning Reserves Account has only been used to appropriate PFDs or to fatten the PF corpus. This is consistent with common sense! “Ownership” of any investment includes ownership of returns on that investment.

THE ‘HOT BUTTON’ DECISION ALASKANS MUST MAKE

The Governor’s recent budget proposal includes spending a portion of the Earnings Reserve as if it were lumped in with the revenue from the ‘taxes on common property’ (oil revenue) to be appropriated in the normal budget process. This is in the legislature’s constitutional authority, but it would be a very significant step toward defining “ownership” and “maximum benefit” that will take careful consideration. The scope of possibilities range from preference for a ‘nanny state’ on one end of the scale, to potentially huge PFD checks, limited government and free market dynamics on the other. The Governor proposes using only part of the Earnings, but the principles are the same no matter what the percentage; 0% to 100%. Trying to find an appropriate level may be a ‘fools errand’. This legislative decision on whether to spend ANY of the earnings MUST reflect a decision of Alaskans knowing their rights and responsibilities regarding their common property.

ARGUMENTS FOR THE DEFENSE OF THE PFD.

Because many reasons are being offered to support the Governor’s plan, please consider the following points favoring the historic legislative approach.

* Once a PFD check is written by the state, it is personal private property. The owner’s right to spend, invest, and protect it is defended by anyone who has sworn to uphold the constitution.

* Without a PFD, Alaska is arguably a socialistic state where the elite govern without the typical checks and balances related to the power to tax.

* The PFD is taxable, just like any other property. It is federally and would be in Alaska if we had an income tax.

* Our Alaska History has shown that when there is ample ‘common property tax’ revenue ( 75% of Alaska’s oil revenue), we overspend! Alaskans pay more per capita for state government than any other state.

* A little known fact is that in 2011 Alaska got less money back from the federal government per capita than any other state. Alaskan’s are paying our own at a level that is not generally understood or appreciated.

SHORT TERM EMERGENCY OPTIONS

We must cut spending. It is the only way out of this crisis. Simply adding revenue streams will only enable the addiction. A pilot’s analogy would be that we are not out of fuel YET, but we are not going to make it unless we jettison some cargo! (spending). If we fail to jettison spending real soon, we are not projected to make it! (“unsustainable”) It is not rational for the legislature to add more cargo (taxes) at this time. IF we ultimately have to resort to more taxes, they will make the situation even worse, and they would need to be approved by majority of Alaskans through their legislators. I believe that time is at least 2-3 years in the future with lots of jettison work to do before that time. The Governor’s spending and revenue proposal is not acceptable.

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