ALASKA, USA: New poll shows declining support for the Alaska Dividend

A recent poll asking Alaskans how to deal with the state’s increasingly severe budget deficit found that trimming the Permanent Fund Dividend or PFD (also know as “the Alaska Dividend”) was the most popular solution. The poll also found that a second strategy for trimming the dividend was third in popularity.

The Alaska dividend is the closest program to a basic income in the world today. Each year it pays out a dividend, usually between $1000 and $2000 per year, financed out of the returns from the Alaska Permanent Fund or APF—a savings portfolio of more than $50 billion accumulated from past state oil revenue. Its enormous popularity earned it the nickname of “the third rail of Alaskan politics,” meaning that any politician who touched it died.

This poll might be an indication that the dividend is losing that status in the face of Alaska’s financial situation, which is deteriorating because of the state’s dependence on oil revenues. The state has no sales or income tax. The vast majority of its revenue comes from taxes, fees, and royalties on the state’s oil exports. Not only have oil prices declined by more than 50 percent since 2014, but the amount of oil exported from Alaska has been declining significantly for years. The state is quickly running through the savings it built up in good years, and it is faced with the situation in which it must either make deep cuts in spending or seek new revenue.

Asking Alaskans to respond to several strategies of dealing with this issue, the Rasmuson Foundation found the following:

66% of Alaskans agreed with “Using a portion of excess earning from the Permanent Fund to fund public services and programs while protecting the dividend program.” 27% opposed.

57% agreed with “Introducing a statewide sales tax.” 41% opposed.

55% agreed with “Putting a cap on the yearly amount of Permanent Fund dividends.” 41% opposed.

54% agreed with “Reducing oil development tax credits offered by the state.” 32% opposed.

41% agreed with “Introducing a state personal income tax.” 55% opposed.

16% agreed with “Making deep funding cuts to essential public services like schools, police, health care, and roads.” 16% opposed.

The first option might not sound like a cut in the dividend, but it is. There are no “excess earnings” in the PDF. Every dollar the PDF receives in returns either goes to spending or to generating more returns and higher dividends in all the years to come. Any strategy that defines some returns as “excess” and diverts those to other spending, necessarily means lower dividends in the future. This opinion protects the existence of the dividend, but it does not protect its future growth or even its current level. If any significant amount is taken in “excess earnings,” it will slow the growth of the dividend in the future, and it might even create negative future growth in the dividend.

The poll did not ask people whether they would support eliminating the dividend entirely, but over time either of the two strategies suggested would lead to significantly smaller dividends than what would otherwise occur.

The poll also did not ask about spending the principal of the PFD, which is constitutionally protected. The legislature would need a constitutional amendment to spend down the $52 billion fund, but with a simple majority vote, it could cancel the dividend and use that money to finance state spending. Before the recent fiscal crisis, such a strategy was politically untenable, but the poll shows that movement in that direction might have become politically tenable.

The poll results suggest that Alaskans might view the dividend as a luxury to be distributed as long as the state is booming. If so, it is very different than how most basic income supporters view it: as an essential tool to promote social justice and an important way to show solidarity with economically disadvantaged individuals. Whether this or any other view of the dividend is strong enough to project it during Alaska’s fiscal crisis remains to be seen.

For more information see:

Alex DeMarban, “Poll: Alaskans prefer new revenue over deep cuts, including tapping Permanent Fund.” Alaska Dispatch News, August 13, 2015.

The Rasmuson Foundation, “Alaska Attitude Survey On The State Fiscal Climate.” The Rasmuson Foundation, Conducted July 13 – 21, 2015

Representative Wes Keller, “My Turn: Don’t be snookered, ther’es no ‘free ride.’” The Juneau Empire. August 20, 2015

Rep Les Gara, “My Turn: Open discussion needed on oil taxation.” The Juneau Empire. August 19, 2015.

NOTE: The paragraph beginning, “The first option might not sound like a cut…” was added after this article was first posted in response to questions from readers.