Alaska editorial: Use caution when talking about Alaska Permanent Fund

Posted: Tuesday, March 08, 2005

This editorial appeared in Saturday's Fairbanks Daily News-Miner:

Most everyone has something to say about the Alaska Permanent Fund. At more than $30 billion, it's just too big to not talk about. But many Alaskans by now have learned that discussion about the fund and what to do with the money it earns comes fraught with a mix of truth and fiction, observation and deception.

As a result, the general understanding of how the permanent fund works seems to be muddled for a good number of people - and has been for years. That's due to people not bothering to read the available information, to politicians making misstatements either for political gain or out of their own ignorance, and to the occasional carelessness by the media.

It's from the media end that the latest contribution comes.

A couple of times in recent weeks the Daily News-Miner has carried headlines about proposals to use the permanent fund to pay for this or that. Just Friday, a headline proclaimed "Gas line plan taps perm fund." A Feb. 19 headline on a story about Fairbanks Sen. Gary Wilken's budget idea said the "state would use savings, perm fund to cover shortfalls."

The problem, though, is that while the headlines are technically correct, they unleash familiar cries of how elected officials and government bureaucrats want to gut the permanent fund and steal the annual dividend from well-deserving residents who view the money as payment for eking out a difficult life in the frozen north.

Those doomsday cries are simply misplaced.

What politicians occasionally propose - and it is their job to propose things - is to spend the annual earnings of the permanent fund. The state constitution allows them to do it on a simple majority vote in the House and Senate and without a vote of the people. Earnings, in fact, are spent each year in the issuance of the annual dividend payments.

But earnings are also used to protect the fund's principal from the eroding effect of inflation and have also been appropriated at various times to the Departments of Corrections, Health and Social Services, Revenue, Public Safety, and Administration and even to the Legislature itself. In some years, the Legislature has placed an extra portion, atop that added to offset inflation, into the fund's principal.

It is the principal that is the sacred portion of the fund. It cannot be spent without the public's assent, gained after approval by at least two-thirds of the House and Senate.

Here are the words, directly from "An Alaskan's Guide to the Permanent Fund," a publication of the Alaska Permanent Fund Corp.:

"The Permanent Fund has two parts: principal and income. The principal is the permanent part of the Permanent Fund; it can be invested but it cannot be spent without a vote of the people. Income is money earned from the investment of the principal and from the reinvestment of undistributed earnings. Income can be spent by the Legislature or reinvested."

Going after the body of the fund itself would lead to a consuming debate. Just ask Fairbanks Rep. Jim Holm, who early last year proposed ending the dividend program and paying out nearly half of the fund's principal in onetime $20,000 payments to Alaskans and using the remainder as an endowment to help pay for state services. The idea, of course, didn't advance.

So when hearing politicians and the press talk about "using the permanent fund," know that what's most likely being talked about is the annual earnings of the fund.

All sides, public, politicians and press, need to be cautious in how they portray the Alaska Permanent Fund.

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