By AlaskaWatchman.com

Money drain

The Alaska Legislature’s fourth special session is sputtering on with no discussion of new facts, only repetitions of hardened positions.

Most conservatives advocate for a 50/50 dividend formula. Those opposed are largely liberal Democrats (be they Democrats, Democrats disguised as Independents or RINOs).

Pollsters tell me that 80% of Alaskans who intend to vote in the next election cycle are pro-dividend. As Permanent Fund Defenders, our job is to identify pro-dividend voters and anti-dividend legislators and then prepare the troops for coming election battles with the aim of removing those who don’t work for the people.

Legislative power brokers want to focus the public’s attention on continuing the budget shell game – which always increases state spending.

Here’s the reality: The only purpose of the initial budget is to enable legislators to tell constituents that they “cut” the budget. Once that is over with, legislators go back and decorate the proverbial Christmas tree – the supplemental budget – with enough cash to meet or exceed the previous year’s spending. That’s how incumbents say with a straight face, “I cut the budget.” They’re hiding money in the supplemental budget, but the blood trail exposes the game.

Can we agree that every dollar the state earns should be counted?

In order to have a conversation, we need to agree on basic facts.

First, audited financial statements of Alaska are prepared by independent accountants.

Second, financial statements are the one true source to know what the state earned and what it spent.

Third, the Comprehensive Annual Financial Report (CAFR) is created in accordance with federal law that requires each state to report its audited income and expense for the prior year. This is really where the rubber meets the road. If you want reality in state spending, read and compare the budget with the CAFR report. If the state screws up the CAFR report, it loses all federal funding. That’s a sledgehammer voters can use to expose budget fabricators.

Can we agree that every dollar the state earns should be counted? What is actually reported, however, is just the General Fund, which is a shrinking part of the state’s overall financial income. We never hear about the entire earnings of the Permanent Fund.

State of Alaska’s General Fund rents and royalties are not reported in accordance with generally accepted accounting principles.

Legislators’ favorite hidey hole is state agencies that masquerade as dedicated funds. Alaska’s Constitution says you can’t have dedicated funds without a majority vote of constituents. Legislative power brokers operate on a different theory. If they’re not caught dedicating funds, they get away with it. Just ask former Governor Walker who refused to transfer $199 million of royalty payments to the Alaska Permanent Fund Corporation.

He also refused to transfer money owed to the Constitutional Budget Reserve according to Legislative Audit Director Kris Curtis.

“State of Alaska’s General Fund rents and royalties are not reported in accordance with generally accepted accounting principles, and management declined to correct the misstatements,” Curtis wrote in her independent auditor’s report from this past February. “Misstatements include an unreported General Fund prior period adjustment of $199.0 million for overstated General Fund royalty revenues of $99.8 million in (fiscal year 2018) and $99.2 million in (fiscal year 2019), and an understatement of $199.0 million due to other funds.”

Curtis notes that the root cause was the decision by Department of Natural Resources officials to transfer mineral royalty revenues owed to the Permanent Fund to the General Fund instead. Additionally, the Constitutional Budget Reserve, the state’s primary — and dwindling — savings account “is materially misstated by $1.6 billion, and Revenue Department officials have also “declined to correct the error,” she wrote.

In fact, 80% of Alaskans agree that the statute on the books should be honored when it comes to PFD payments.

All the while, special interest groups continue to demand more money.

I hope you caught the op-ed piece by the American Association of Retired Persons and Alaska Municipal League. The Alaska AARP Advocacy Director Marge Stoneking and the Executive Director of the Alaska Municipal League Nils Andreassen explained why they supported pouring more money into the Alaska bureaucracy. Their op-ed identifies Legislative leaders who cut the dividend and agreed to tax increases. The private briefings were exclusively for Senator Jessie Kiehl, Peter Micciche and Natasha Von Imhoff. The House briefings were for Representative Andy Josephson, Ivy Spohnholz, Bart LeBon and Adam Wool. Thank you for identifying opponents of the dividend.

The conversations were intended to identify the “broad based taxes as part of the broad-based revenue measures” (taxes), that would solve Alaska’s fiscal crises.” It contained no discussion of future private sector economies or suggested cuts in swollen, Jabba-the-Hutt government.

For a contrast, look at the CAFR report for Alaska. Audited financials are fiscal reality.

AARP and AML said they “were pleased to see the Fiscal Plan Working Group’s recommendation for adopting a broad-based revenue measure, in addition to other revenue measures, as part of a comprehensive solution. “Over the past five years, budget cuts have fallen heavily on local governments,” they claim.

According to audited statements: “The total expenditures charged against General Fund appropriations during FY18 amounted to $9.1 billion – an increase of $18.8 million over FY17.

Likewise, total expenditures charged against General Fund appropriations during FY 19 amounted to $9.65 billion, an increase of $564.6 million over FY18.

And again, total expenditures charged against General Fund appropriations during FY20 amounted to $9.83 billion, an increase of $178.2 million over FY19.

For three years of the past five years, state expenses exceeded the budget and increased the budget overall by $762 million.

Neither the AARP nor the AML speak for the 75,000 seniors who had their dividends traded out for budget increases. In fact, 80% of Alaskans agree that the statute on the books should be honored when it comes to PFD payments. Prior budget games resulted in a dividend less than half of what it should have been. No thanks.

Seniors and all Alaskans can choose to spend our dividends without that help.

The views expressed here are those of the author.

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PFD debate: Alaska legislators hide our money, then demand more

Jim Crawford
Jim Crawford is a third-generation Alaskan entrepreneur who resides in Anchorage. The Alaska Institute for Growth is a local think tank which studies and reports on and may sponsor projects of sustained economic growth for the Alaskan economy. Mr. Crawford known as the Permanent Fund Defender was a member of the Investment Advisory Committee, appointed by Governor Hammond to plan and execute the Alaska Permanent Fund Corporation.


16 Comments

  • Timothy Colbath says:

    Fellow Alaskans. We have but ONE chance to fix much of what is wrong in Juneau in ’22. Article Xlll section 3 is Very clear. When a Constitutional has not been held in the past ten years – the Lt. Governor is directed to put the following question on the next general election ballot: “Shall there be a constitutional convention?”. The constitutional convention is the One Thing that scares Every Politician in Juneau. Just listen to Rep. Shower’s testimony to the finance committee.
    If the majority vote yes – a convention patterned after the 1955 convention will be held.
    This is when we address: Enshrine the original formulation into the constitution. Address the ignoring/changing of the meaning of the word “Shall” which is now being treated ‘as whatever the hel* they want’. Move the legislature to the building they already own in Anchorage and discuss moving the Capitol to the road system. Spending cap/Balanced budget requirement. Give the Governor back the power to choose Supreme Court Judges by eliminating the committee that only provides the governor with 4 options to choose from. Stop the shell games being played with our money. Forensic audits of the state finances every 5 years (or less). Formally Limit Federal Over-reach that denies us our right to develop our own resources and limit federal powers in our state to the maximum degree possible.
    The list is not inclusive and must be built on. Discussed and common ground determined Before it is held. Like NOW is the time to start.
    Contact the Lt. Governor a remind him of his constitutional obligation to put the question on the ballot.

  • Common Peasant says:

    We humans could be discovering the mysteries of life. We could be cruising the cosmos. We could be activating our energy. We could be expanding our consciousness. We could be building futuristic cities. We could have flying cars.

    But here we are, fighting over money and the illusion of power. Ugly politics in an ugly ass city.

    At least the land is beautiful.

  • Herman Nelson says:

    The real issue is- our employees who we send to Juneau. They think our money is their money to spend as they please. We need term limits and we need to have the PFD issue put on the ballot for ALL Alaskan’s to vote on. That would include the money our employees stole from us the last couple years. Would you sign a petition that Alaskan’s PFDs can’t be touched by our employees (politician crooks), along with restitution of the funds they stole? Let’s add the cherry on top called TERM LIMITS.

  • Ed+Martin+Jr says:

    With all do respect Jim your statement ” Most conservatives advocate for a 50/50 dividend formula. ” Please specify which 50 / 50 Formula? If you mean the Governor ” Constitutional Amendment Proposed 50 / 50 Deal ” YOU ARE WRONG! I have not heard one ” Conservative Democrat or Republican ” say they wish to endow Government in cash under our Constitution, period .That is the other 1/2 of the 50 / 50 plan the Governor and all RINO ‘S want ! Be honest Jim !
    Jim I also believe that your 80% that the polls point to are Original Statute “SUPPORTING Voters ” Not the Governor / Rino supported Plan Voters . Please verify .
    As my Dad, Ed Martin Sr., often said “give credit where credit is due ” so, Jim your analysis of how to idenify true revenue ., Audits & Accountability is Primo advice !
    Now on to the real reason your writing this column,
    [ Governor Walker who refused to transfer $199 million of royalty payments to the Alaska Permanent Fund Corporation.]
    He also refused to transfer money owed to the Constitutional Budget Reserve according to Legislative Audit Director Kris Curtis.
    You found the graft by public official(s) ! It should also include the violation of Law(s) too, going back to the Governor & subsequent Governor in signing a budget(s) year after year & NOT PAYING THE FULL PFD by Law!

    • Katherine says:

      Ed. I’m getting so confused on all this. I want the original PFD rules followed. Walker cheated us out of this and I get so much info that I can’t understand what’s right. I’m worried Dunleavy is trying to put something over on us. It is my firm belief that we need to Cut Spending in any way possible. This does not include new taxes. That is not reducing spending!

  • G Aleutian says:

    It would be cheaper to flip a coin. The truth is not in them.

  • Fritz+Pettyjohn says:

    great analysis

  • Proud Alaskan says:

    In fact, 80% of Alaskans agree that the statute on the books should be honored when it comes to PFD payments.
    It’s the LAW to give us a full PFD
    If walker get back into the governor’s house we’re screwed

  • Ralph says:

    I remember they failed to plow our roads.. said we were in a budget crisis, and the PFD they STOLE was sitting un-touched in the Earnings Reserve!?
    The Anchorage Assembly and Alaska’s local government, Assembly, Representatives, better get their jobs straight.. I say jobs because what they are doing right now, is an act.. just like their Assembly meeting to hear the public.. its an act.
    !!!!!!Acta Non Verba!!!!!!

  • MICHAEL+HUGHES says:

    Government is not following enacted statues, this is leading to a breakdown in society. If they won’t follow the law, why should we?

  • Andy says:

    Walker ripped the PFD open for a free for all, since then the legislature has had no interest in fixing what he has done, why would they?

  • Lila from Nikiski says:

    Every Alaskan I’ve talked to supports a full PFD, not a 50/50 split. The state government is stealing money from children, seniors, and every Alaskan resident. This should make us very upset. How do we fight this? They have more money to fight than we do, I believe most of them are getting bought off by some special interest group. Why else would most of our legislators not support giving a full PFD, aren’t they Alaskans too, you said 80% of Alaskans support a full PFD?

  • Leland Rubey says:

    I just want to know why the Alaska Supreme Court has not required the Alaska State Legislature to simply follow the dividend laws already in place?

    • Art Chance says:

      Probably most importantly, the Supreme Court doesn’t like Republicans generally and Mike Dunleavy specifically. He’ll pay for that $300K he vetoed out of the Court’s budget over abortion funding in every case that goes to the SC.
      In the original case, I haven’t read all the pleadings but I’ve read enough to get the drift of the thinking. In my experience, the SC almost never imposes its own thinking on a case; it chooses between the arguments of the parties, even if anyone with a brain can see that there is a better argument. My sense is that the case was badly argued by the State. While it is ironclad that any State expenditure must be supported by an appropriation, in the case of the PFD, the Legislature has statutorily dictated how that appropriation will be made. That argument either wasn’t adequately made or the Court ignored it. Yes, the Court is right that the Legislature has the power to set the Dividend by appropriation, but it has already set the process by which the Dividend will be set in explicit statute. Maybe the question can be revisited.

  • Ed+Martin+Jr says:

    Art here is the root of the problem in the ASC decision ” The superior court ruled against the legislators, concluding that even if the1976 constitutional amendment gave the legislature dedication powers over Permanent Fund income, the legislature’s actual use of the income remained subject to normal
    appropriation and veto budgetary processes. The legislators appeal, making the same arguments to us that they made to the superior court and emphasizing what they contend
    is the sound public policy behind Alaska’s nearly 40-year-old dividend program.
    The narrow question before us is whether the 1976 amendment to the
    Alaska Constitution exempted the legislature’s use of Permanent Fund income from the
    Constitution’s anti-dedication clause.”
    Art, I post the beginning of there statement but this is the part of the argument that was in error as I see it
    “The answer cannot be found by weighing the merits of the dividend program or by examining the statutory dividend formula. ”
    This is where our ASC screwed all of us Alaskans by making the “rule of Law ” null and void!
    How dare they! The balance of the preface statement follows below
    ” The answer is found only in the language of the Alaska Constitution. And, as we explain below, the answer is no — the 1976 amendment did not exempt the legislature’s use of
    Permanent Fund income from the Constitution’s anti-dedication clause. Although the
    superior court did not reach this question, the court’s ultimate conclusion nonetheless is
    correct: The legislature’s use of Permanent Fund income is subject to normal
    appropriation and veto budgetary processes. We affirm the superior court’s decision on
    this alternative ground ”
    Note ” Alternative Ground” …. BS
    Furthermore, this is what happened that started the “wheels of deceit” by some of the same” non – Legislators” currently in the Senate! ” The legislature met in July but did not vote to override the
    governor’s veto. (24. See Alaska Const. art. II, § 16 (“[A]ppropriation bills . . . , although vetoed,
    become law by affirmative vote of three-fourths of the membership of the legislature.”).
    This resulted in 2016 Permanent Fund dividend payments of $1,022
    to eligible Alaskans, about half of what had been expected under the legislature’s
    appropriation. ”
    Question Art , did in fact did the legislature meet in July & vote ? In my conversation with House Speaker Chenalt they notify the Senate wiliness to vote but the legislature never did! Is this true ? Not taking up a vote is different then voting ! If memory serves me the main reason the & today remains the same fear of reelection is the reason they (the current & past Legislators) avoid their duty to us under their oaths. Clear violation of oath & statutory Law is so obvious!

    • Timothy Colbath says:

      One of the issues that the constitutional convention will allow us to do is return the power to choose Supreme Court justices to the governor and eliminate the committee that choose the 4 candidates that they approve of for the Governor to choose from. When the governor only has 4 liberal justices to choose from – this is what results – a court that does not follow the statutes.

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