March 5, 2003, Voice of the Times praises new permanent fund thinking in Juneau

Posted: Monday, March 10, 2003

Signs of real political courage are beginning to emerge in Juneau.

Gov. Frank Murkowski and several legislative leaders say they are either willing to look at -- or are strongly in favor of -- using the Permanent Fund for its original purpose.

For many years it has been considered political suicide to suggest that the Permanent Fund should be used for anything but paying dividends to individual Alaskans. That ''conventional wisdom'' ignored the fact that the fund was established as a rainy day account into which surplus oil revenues could be placed to meet future needs.

The dividend program was an afterthought meant to give the Alaska public a personal stake in the fund and motivation to pay attention to its governance.

Several members of the House Finance Committee said on Monday they are willing to consider using Permanent Fund earnings for both state expenses and dividend payments.

The most straightforward was Rep. Pete Kott, an Eagle River Republican, who said the dividend program is ''one of the worst things we got ourselves into a number of years ago.''

Kott said he considers the dividends important to the state's economy and that they should be continued in some form. But, he added, they are not a legitimate entitlement that should be paid regardless of the impact on the state budget.

At the opposite end of the scale is Rep. Harry Crawford, an Anchorage Democrat who proposes to pay the dividend by drawing money from the Constitutional Budget Reserve, a pot of money from one-time settlements of disputes with oil companies over crude oil prices. The CBR is a reserve fund used by the Legislature to make up the difference between the state's budget and available revenues.

The CBR balance currently stands at $1.9 billion, a total that will surely be gone in the next few years. That will be the time when the state will be forced to decide whether to use a portion of Permanent Fund earnings for the fund's original purpose or impose new taxes to fill the fiscal gap.

Drawing the CBR down to pay dividends would be fiscal lunacy. Crawford's stated purpose is to cushion the impact on the economy from budget cuts and smaller dividend checks. But it would be a step toward bringing back the income tax or imposing a statewide sales tax.

Using taxes to pay dividends would be a form of redistribution of personal income more appropriate for a socialist government than for one of the United States.

Far better to use the Permanent Fund for its original mission. Accomplishing that will require courage from many more of Alaska's state leaders.

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