My Turn: Thanking Terry Gardner for helping shape the PFD
As you peer into your bank account to see if your $1,107.56 dividend has arrived, say thanks to former Ketchikan legislator Terry Gardner.
Hugh Malone was clearly the founder of Alaska's Permanent Fund and Governor Hammond appropriately earned the nickname "Father of the Dividend." But had former Ketchikan Rep. Terry Gardner not done what he did when he did it, it is unlikely that Alaska's dividend program would exist.
The history of what we now know as the PFD began in 1975 when Kenai legislator Hugh Malone pushed two proposals through the Alaska State Legislature proposing the creation of a Permanent Fund. Malone's initial proposal was to create a Permanent Fund by statute. Governor Hammond vetoed Malone's first proposal, which prompted Malone to then push his idea through in the form of a proposal to amend Alaska's constitution.
Proposals to amend the constitution are not subject to a governor's veto. They require a two-thirds vote of the Legislature followed by voter approval. The voters approved Malone's proposal Nov. 2, 1976.
In 1980, House State Affairs Committee Chairman Mike Miller of Juneau (not the Mike Miller legislator from Fairbanks) began taking testimony on management systems for world-class investment funds comparable to the Permanent Fund. As those hearings were under way, Terry Gardner, a legislator from Ketchikan and member of the House State Affairs Committee, made a proposal to the State Affairs Committee that Alaska should distribute cash payments to its residents annually. The term Permanent Fund Dividend had not been invented yet.
The State Affairs Committee put Gardner's proposal into writing by rewriting House Bill 696, which was originally introduced by Bill Miles.
When HB 696 was referred to the State Affairs Committee it was titled, "An act relating to the individual tax credit allowed under the Alaska Net Income Tax Act." By the time we had finished our wordsmithing its title read "An act suspending the net individual income tax and providing for payments to state residents."
House Bill 696 was passed on to the finance committee as a House State Affairs Committee Bill, which means it was a bill by and from the committee and its members. I know. I was on the committee.
Out of concern that the Senate would not pass HB 696, the finance committee also took up the House State Affairs version of Sen. Bill Sumner's Senate Bill 122 and amended it by adding the content of HB 696. The amending motion, made by Fairbanks Rep. Bryan Rogers, read "to be added as received from the State Affairs Committee."
There was no connection between the proposal to distribute cash and the Permanent Fund earnings until Bryan Rogers made the motion to add language providing that the amount to be distributed would equal one-half of the Permanent Fund's annual earnings to SB 122.
SB 122 passed the House on March 20, 1980, containing the language that originated in the State Affairs Committee. That was the origin of the first statute providing for annual cash payments of one-half of the Permanent Fund's earnings to Alaska's residents.
The 1980 proposal was put on hold and then stopped when Ron and Penny Zoble challenged it in court, over a prevision requiring residents to have five years of residency to receive the a full share of the cash.
In 1982, the U.S. Supreme Court declared that the plan was unconstitutional. The Legislature then went back to the drawing board.
By 1982, Libertarian Rep.Dick Randolph had proposed and popularized the idea of repealing, rather than suspending, the income tax and sending every resident $1,000 regardless of residency. One thousand dollars was about the amount most residents would have received by then if the first proposal had not been derailed.
Randolph's proposal had become so popular with the voters that a slim and reluctant majority of the Legislature felt they had no choice but to do it Randolph's way.
Randolph's bill had passed the House on April 12, 1982, by a slim 21 to 19 vote.
Kenai Republican Rep. O'Connell was adamantly opposed to the idea of distributing cash and even more opposed to the idea of the Libertarians getting credit for it if we did.
Seeing the slim vote and the opportunity to take the credit away from the Libertarians, Rep. O'Connell moved for reconsideration (a motion that forces the bill to be brought up again the following day). Randolph's legislation failed 18 to, 20 the following day with two members absent.
On March 9, 1982, about the same time the House members began arguing over who was going to get credit, Governor Hammond jumped into the fray with the introduction of Senate Bill 842.
Governor Hammond's Bill effectively combined Terry Gardner's original proposal providing for an ongoing cash distribution program with Bryan Rogers's proposal to distribute half of the Permanent Fund's earnings with the House Finance Committee's version of Randolph's proposal to send every Alaskan an initial first time distribution of $1,000.
Governor Hammond's bill passed both houses and became law June 16, 1982, and earned him the nickname "Father of the Dividend."
Two years earlier, there were about 60 bills introduced offering tax breaks and other competing ideas. Governor Hammond initially proposed the distribution of Permanent Fund shares. His proposal would have issued every Alaskan one share for each year of residency. At the time, we had an income tax and the shares would have been applicable as an offset to taxes owed and would have been worth would $50 each.
Excepting for Terry Gardner no one had proposed the direct distribution of cash as a primary means of sharing Alaska's newfound wealth. Not one!
Had Gardner not done what he did when he did it, it is unlikely that anyone else would have either and it is highly unlikely that we would have a cash distribution system resembling anything like what we have today.
• Ray Metcalfe is a former state legislator and a founder of the Republican Moderate Party of Alaska.