Constitutionalize the DividendBy Sen. Tom Begich
June 07, 2019
Earlier this year – and for the prior two years – I have proposed a Constitutional Amendment which, if passed in its most recent form, would place the Dividend in the Constitution with a new and sustainable formula. Under the current formula most analysts agree that eventually we would be faced with massive deficits in the near term and a depletion of the Fund and consequently an end to the Dividend in the long term. Neither is a good option. Under my plan, SS SJR 2 would propose a 4 percent annual use of the entire Permanent Fund (4 percent of Market Value, or POMV) with 50 percent dedicated to the Dividend and 50 percent dedicated to state services. While initially a reduced dividend (about $1,900 this year), the Dividend would grow with the robustness of the Fund and the draw on the Fund would be fundamentally sustainable.
Alone this bill would not be sufficient to meet our obligations for state services. For the past seven years the legislature has diligently trimmed back the budget and this year an additional over $200 million was proposed to be cut by strong majorities in the House and the Senate. Most of us - Republican, Democrat, and Independent – agree that we have reached the limit of what we might cut without seriously harming the economy and the quality of life of our state. That means that, as I have written before, if we are to live within our means we need to get a fair share of our means. I have supported, and continue to support, a significant revision of the tax credit policy we presently provide the oil industry in Alaska. At present oil prices the oil industry receives a $8 per barrel credit against their taxes. I have supported a significant reduction in that tax credit, or its elimination, to ensure that we receive full value for our non-renewable resources in a manner that ensures we aren’t with empty holes in the ground and a slowly deteriorating state. The alternative to a fair tax rate on the oil and gas industry is higher crime rates, a breakdown of our infrastructure, a weakening education system that is showing significant improvement, and a loss of opportunity for all young Alaskans. That is not a future I hope – nor is it one we should allow to happen.
Today, this week, this month we must resolve the Dividend question for this year and set out a path for how we will address the Fund, the Dividend, and oil and gas taxes in future years. After reviewing all of these issues, I will not be supporting a full Dividend this year. While this will anger some of you and please others, it leaves me in a frustrating and uncomfortable place. But it is not my job to make everyone happy. It is my job to ensure we have a sustainable future that serves all Alaskans. We can’t afford a full dividend this year without risking our education and health care systems.
I continue to implore my colleagues to constitutionalize the Dividend or come up with a statutory plan that seeks a positive outcome for our future. I have faith that we will do so.
Sen. Tom Begich
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Received May June 06, 2019 - Published June 07, 2019
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