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| Alaska citizen dividend |
This post gives the laws (current and proposed) about the Alaska citizen dividend. It is a long post. Here are the main points:
- The Alaska Permanent Fund is in the Alaska Constitution. Two-thirds of Alaskan voters must agree to any changes.
- The Alaska Permanent Fund citizen dividend is in a normal law that can be changed easily by politicians.
- There is a new law proposed to protect citizen dividend in the Alaska Constitution, thus requiring two-third referendum before politicians can confiscate the people's citizen dividend. The proposed law is still not voted on yet. The last hearing was in Feb 2014.
Here are a few highlights from the hearing in Feb 2014.
- He (Representative Les Gara) explained that Alaska has had the least differential growth between rich and poor than any other state in the country because of the PFD. He opined that cutting the dividend is the most regressive action that can be taken, because cutting it by $500, while not significantly impacting someone who makes $1 million, would impact someone who makes $12 an hour; it would affect the working class.
Indeed, confiscation (denial) of citizen dividend is the most regression action. To the poorest whose only income is the citizen dividend, that is a 100% tax rate.
- Representative Gara said as fiscal pressures mount in Alaska, there are some who will look first to the PFD. He stated he would like to protect the current dividend formula in the constitution so that the dividend does not get decreased as people begin fighting over deficits.
Politicians in almost all countries are doing that: raiding our citizen dividend to fund the country budget. That is taking 100% from the poor to fund the country.
- And if you did need $100 million, who would want to take half of that from the poor, retired, and underemployed and 100 percent of it from Alaska residents, nothing from nonresidents? It's the worst place to go for money, even in a time of shortage.
Yes, please don't confiscate from the poor.
Read the full post:
A) The current situation of the Alaska citizen dividend
Alaska is probably the first country to legally recognize and implement a citizen dividend. It created the Alaska Permanent Fund inside the Alaska Constitution. Changes to that law require a two-third referendum.
Alaska Constitution Article IX, Section 15This part of the Alaska Constitution created the Alaska Permanent Fund, but payment of citizen dividend from the Fund is not in the Constitution. It is inside a normal piece of law which can be changed easily by a majority of the politicians in the legislature.
Section 15. Alaska Permanent Fund.
At least twenty-five percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments. All income from the permanent fund shall be deposited in the general fund unless otherwise provided by law [Effective February 21, 1977].
(from http://www.apfc.org/home/Content/aboutAPFC/constAndLaw.cfm)
Alaska Statutes - Article 01.: ALASKA PERMANENT FUND - See more at: http://codes.lp.findlaw.com/akstatutes/37/37.13./01.#sthash.98Bn7Xxp.dpuf
Sec. 37.13.140. Income.
Net income of the fund includes income of the earnings reserve account established under AS 37.13.145 . Net income of the fund shall be computed annually as of the last day of the fiscal year in accordance with generally accepted accounting principles, excluding any unrealized gains or losses. Income available for distribution equals 21 percent of the net income of the fund for the last five fiscal years, including the fiscal year just ended, but may not exceed net income of the fund for the fiscal year just ended plus the balance in the earnings reserve account described in AS 37.13.145.
Sec. 37.13.145. Disposition of income.There are a few interesting points to note from this law. Net Income does not include unrealized gains or losses. Dividend amount is only half of the income available for distribution, which is 21% of the net income for the last 5 years.
(a) The earnings reserve account is established as a separate account in the fund. Income from the fund shall be deposited by the corporation into the account as soon as it is received. Money in the account shall be invested in investments authorized under AS 37.13.120.
(b) At the end of each fiscal year, the corporation shall transfer from the earnings reserve account to the dividend fund established under AS 43.23.045, 50 percent of the income available for distribution under AS 37.13.140. (from http://www.apfc.org/home/Content/aboutAPFC/constAndLaw.cfm)
B) Protecting the citizen dividend from hungry politicians
As described above, any political party in power can easily change the statute on the Alaska dividend, confiscate the money and waste it in any way they want.
To allow normal Alaskans more protection and control over their citizen dividend, there is a bill to include the dividend in the Constitution, where changes require a two-third referendum. That is, the politicians will have to get two-thirds of the voting Alaskans to agree, if they want their citizen dividend to be confiscated.
Here is the full text for the bill HJR17 (http://www.legis.state.ak.us/PDF/28/Bills/HJR017A.PDF)
The lastest progress of the bill is reported in Feb 6, 2014.NEWS: Guarantee the PFD: Committee Hears Democrats’ Constitutional Amendment
JUNEAU – Today, Representative Les Gara (D-Anchorage) presented a constitutional amendment to enshrine the Permanent Fund Dividend program in the Alaska Constitution to the House State Affairs Committee.
“With a rollback of oil revenue, there is a great fear that some politicians will seek to cut the dividend,” said Gara, the prime sponsor of the proposed amendment. “Instead, we should protect the dividend and seek a fair share of our oil.”
"The House State Affairs Committee heard the proposed amendment briefly. The committee chairman said the committee would bring the bill back before the committee at a later date."The bill is still not settled yet.
Here is the full text of the official hearing. This is the part about HR17.
HJR 17-CONST AM: GUARANTEE PERM FUND DIVIDEND
DRAFT
9:53:55 AM
CHAIR LYNN announced that the final order of business was HOUSE JOINT RESOLUTION NO. 17, Proposing amendments to the Constitution of the State of Alaska relating to the Alaska permanent fund, establishing the earnings reserve account, relating to the permanent fund dividend, and requiring the permanent fund dividend be at least equal to the amount that would be calculated under current law.
9:53:58 AM
REPRESENTATIVE LES GARA, Alaska State Legislature, as sponsor, introduced HJR 17. He said the proposed joint resolution asks for the current dividend formula to be put in the Constitution of the State of Alaska. He mentioned that he and Rick Halford were friends with the late Governor Jay, who would say, "You get a fair share for your oil first, and you touch the dividend last." He said the Alaska permanent fund dividend (PFD) creates roughly 10,000 jobs in Alaska and "levels out the highs and lows." He explained that Alaska has had the least differential growth between rich and poor than any other state in the country because of the PFD. He opined that cutting the dividend is the most regressive action that can be taken, because cutting it by $500, while not significantly impacting someone who makes $1 million, would impact someone who makes $12 an hour; it would affect the working class.
9:55:19 AM
REPRESENTATIVE GARA cited an article from The Juneau Empire that quotes Governor Hammond as having said his dividend program would allow Alaskans to share in their resource wealth, confine the benefits to Alaskans only, have an equitable impact on both rich and poor, and maximize the favorable impact upon the state's economy by keeping a far larger portion of money to fund the programs here in Alaska. Representative Gara said as fiscal pressures mount in Alaska, there are some who will look first to the PFD. He stated he would like to protect the current dividend formula in the constitution so that the dividend does not get decreased as people begin fighting over deficits.
REPRESENTATIVE GARA said the Department of Revenue has predicted that even under "this new oil bill," Alaska will be down to approximately 370,000 barrels of oil a year in ten years' time. He said that is "about the same as they had predicted under a former oil law." He said the state is probably going to be down in revenue by about $12 billion over the next ten years, depending upon oil prices. He reiterated that he does not want the people's dividend to be harmed. He expressed his hope that SB 21 would be reversed, but said regardless of how the state proceeds, the dividend has been a way to stabilize the economy in Alaska and to ensure those in rural Alaska have money for essentials, such as fuel. He said the dividend money spent by rural and urban Alaskans goes right back in to the economy. He relayed there is a study by the Institute of Social and Economic Research (ISER) in the committee packet, which shows what the PFD does to stabilize the economy and prevent the wide gap between rich and poor.
9:58:17 AM
RICK HALFORD thanked the committee for hearing HJR 17, which he opined is an important issue. He continued as follows:
CHAIR LYNN announced that the final order of business was HOUSE JOINT RESOLUTION NO. 17, Proposing amendments to the Constitution of the State of Alaska relating to the Alaska permanent fund, establishing the earnings reserve account, relating to the permanent fund dividend, and requiring the permanent fund dividend be at least equal to the amount that would be calculated under current law.
9:53:58 AM
REPRESENTATIVE LES GARA, Alaska State Legislature, as sponsor, introduced HJR 17. He said the proposed joint resolution asks for the current dividend formula to be put in the Constitution of the State of Alaska. He mentioned that he and Rick Halford were friends with the late Governor Jay, who would say, "You get a fair share for your oil first, and you touch the dividend last." He said the Alaska permanent fund dividend (PFD) creates roughly 10,000 jobs in Alaska and "levels out the highs and lows." He explained that Alaska has had the least differential growth between rich and poor than any other state in the country because of the PFD. He opined that cutting the dividend is the most regressive action that can be taken, because cutting it by $500, while not significantly impacting someone who makes $1 million, would impact someone who makes $12 an hour; it would affect the working class.
9:55:19 AM
REPRESENTATIVE GARA cited an article from The Juneau Empire that quotes Governor Hammond as having said his dividend program would allow Alaskans to share in their resource wealth, confine the benefits to Alaskans only, have an equitable impact on both rich and poor, and maximize the favorable impact upon the state's economy by keeping a far larger portion of money to fund the programs here in Alaska. Representative Gara said as fiscal pressures mount in Alaska, there are some who will look first to the PFD. He stated he would like to protect the current dividend formula in the constitution so that the dividend does not get decreased as people begin fighting over deficits.
REPRESENTATIVE GARA said the Department of Revenue has predicted that even under "this new oil bill," Alaska will be down to approximately 370,000 barrels of oil a year in ten years' time. He said that is "about the same as they had predicted under a former oil law." He said the state is probably going to be down in revenue by about $12 billion over the next ten years, depending upon oil prices. He reiterated that he does not want the people's dividend to be harmed. He expressed his hope that SB 21 would be reversed, but said regardless of how the state proceeds, the dividend has been a way to stabilize the economy in Alaska and to ensure those in rural Alaska have money for essentials, such as fuel. He said the dividend money spent by rural and urban Alaskans goes right back in to the economy. He relayed there is a study by the Institute of Social and Economic Research (ISER) in the committee packet, which shows what the PFD does to stabilize the economy and prevent the wide gap between rich and poor.
9:58:17 AM
RICK HALFORD thanked the committee for hearing HJR 17, which he opined is an important issue. He continued as follows:
It is sad that the constituency for equality doesn't have enough insiders in that it's not regressive enough for some or progressive enough for others, but the fact is that the permanent fund dividend is a part of the economic base of the State of Alaska. And if you did need $100 million, who would want to take half of that from the poor, retired, and underemployed and 100 percent of it from Alaska residents, nothing from nonresidents? It's the worst place to go for money, even in a time of shortage.
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