The Alaska Permanent Fund Dividend shares a clear and troubling parallel with the Federal Reserve’s habit of printing money. The issue is not the act of paying the dividend, just as the problem with monetary policy is not the existence of currency itself. The problem arises when government diverts that value for its own spending while shielding itself from direct accountability. When the legislature withholds or redirects the PFD, it extracts wealth from Alaskans in much the same way inflation erodes the value of savings. In both cases, citizens lose purchasing power or economic claim without a direct tax vote, and the local economy suffers all while government gains resources to spend.

The Permanent Fund Dividend was created to return a share of Alaska’s resource wealth directly to the people who own it. This simple return strengthens the economy by moving real money through local businesses. Established in the early 1980s, the PFD is funded by earnings from the Alaska Permanent Fund, a sovereign wealth fund built from oil royalties and disciplined investment. For decades, a statutory formula governed distributions, using a five-year average of earnings and splitting returns between reinvestment and dividends for residents. That formula treated Alaskans as shareholders in a productive asset, not customers of government. When fully paid, the dividend put money into households without bureaucracy, allowing families to spend, save or invest according to their own needs.

Diverting the dividend removes disposable capital from the private economy. When Alaskans receive a full dividend, that money circulates quickly through local communities.

In 2016, faced with fiscal pressure created by years of legislative overspending and declining oil revenues, state government chose to short the dividend rather than restrain itself. Governor Bill Walker vetoed roughly half of the expected dividend, redirecting hundreds of millions of dollars into state operations and designated savings. The Alaska Supreme Court later ruled, in the Wielechowski case, that dividends were subject to annual appropriation by the Legislature, effectively removing the guardrails that had protected the program. Since then, the statutory formula has been routinely ignored, and billions of dollars of wealth, likely between $10 and $16 billion, have been withheld from Alaskans and the broader state economy.

This is not a neutral budget choice. It is an intentional transfer of value. Similarly, when the Federal Reserve expands the money supply to finance government obligations, each existing dollar buys less. Prices rise, savings lose value, and families pay the cost without ever seeing a tax bill. That is why inflation, driven by monetary policy rather than a public vote, is often called a hidden tax. Diverting the PFD works the same way. Alaskans lose income they reasonably expect and depend on, while the state gains spending authority without enacting an income or sales tax. The loss shows up quietly in tighter household budgets, higher debt and reduced private economic activity.

Over time, this policy functions as a statewide tax collected equally from every Alaskan, even children, regardless of income level.

There is another consequence that is often ignored. Diverting the dividend removes disposable capital from the private economy. When Alaskans receive a full dividend, that money circulates quickly through local communities. Families fix homes, pay down debt, purchase goods, travel and support small businesses. In rural Alaska, the dividend often provides one of the few reliable injections of cash all year. Studies by the University of Alaska Anchorage’s Institute of Social and Economic Research (ISER) have consistently shown that full PFD payments boost retail sales, support thousands of short-term jobs, and provide an important economic buffer where alternatives are limited.

Economists describe this effect using the economic multiplier. Money placed directly into household hands tends to be spent multiple times as it moves through the economy. When people spend locally, it becomes income for someone else, who then spends again, continuing until savings or imports slow the cycle. Direct household transfers, especially to middle- and lower-income families, tend to have higher multipliers than government spending because the money moves faster and with less overhead. ISER modeling suggests that PFD payments generate multipliers well above one, meaning each dollar paid creates more than a dollar in economic activity.

When dividend dollars are diverted to state programs, that multiplier shrinks. Bureaucratic delays, administrative costs, contracting inefficiencies and long project timelines slow the circulation of money. ISER has noted that while government spending can support some employment, reducing the PFD produces large negative effects on household income with comparatively smaller economic gains. In simple terms, the state economy gets less return for every PFD dollar it takes. This mirrors the broader problem with centralized economic control, value concentrates, costs rise, and benefits spread unevenly.

Over time, this policy functions as a statewide tax collected equally from every Alaskan, even children, regardless of income level. That makes it regressive by definition. Families who rely on the dividend for essentials feel the loss most acutely, while higher-income earners can absorb it more easily and often prefer giving up the dividend rather than paying a new tax. When fully paid, the PFD has lifted thousands out of poverty and reduced reliance on public assistance. When it is capped, those gains are quietly reversed. Like inflation, the burden falls hardest on those least able to absorb it.

Supporters of diversion argue it avoids income taxes or service cuts. That argument misses the point. Inflation is attractive to governments for the same reason. It allows spending without transparency. It avoids hard choices. It shifts costs onto citizens without forcing policymakers to justify them. Whether through monetary policy or budget maneuvers, the result is the same: government expands and families pay indirectly.

The Permanent Fund Dividend represents democratic ownership of Alaska’s resources. It is simple, fair and efficient. It respects individual choice and maximizes economic benefit by trusting people rather than bureaucracy. Withholding it for government convenience reverses that principle. Restoring the statutory formula, or protecting it constitutionally, would reaffirm a basic truth. Alaska’s resource wealth belongs first to the people. Until that happens, continued diversion of the PFD will remain what it has become, a localized version of inflation, quiet, politically convenient and profoundly unfair to Alaskans.

The views expressed here are those of the author.

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