Opinion: It’s time to have a tough conversation about the future of PFDs

Has been updated: 1 1 hour ago release date: 1 1 hour ago

In my years of teaching and coaching leadership to college students and corporate clients, two observations about leadership inadequacies have stuck with me. The first is what I call “pretending not to know.” A current example is the state pretending not to know that it can no longer afford to pay Permanent Fund dividends. Juneau’s legislators and administration are conspiring to run annual budget deficits while trying to fund education and essential services, pretending not to know that the solution is to cut or eliminate dividends. doing.

Mention cutting or eliminating dividends and all kinds of arm-waving occurs. “It’s in the state constitution” is a big problem. Okay, let’s amend the constitution. Sure, that would be tough. Stop wasting your time and move on.

This leads to my second observation about poor leadership. It is the belief that a crisis is necessary to make difficult decisions. Politicians call this “covering.” It’s a way to escape personal responsibility. In times of crisis, people want to survive, so they can get away with almost anything under the guise of survival. Leaders don’t wait for a crisis. They don’t shy away from making difficult decisions. They prevent crises from occurring by steering the nation toward a viable future.

Here’s another thought. Are we already in crisis and pretending we don’t know it? Let’s stop for a moment and think about these issues. With a systematic decline in the state’s working-age population, years of structural budget deficits, underfunding of schools, declining oil revenues, and a shrinking economy with little hope for anything other than stagnation and decline, the Permanent Fund’s trustees , running out of usable reserves to support the state budget, significant increases in Medicaid spending, impeding growth in the homeless population, and Cook Inlet gas reserves while large amounts of gas are available. It warns of the threat of future power outages due to almost depletion of water. Reserves on the northern slopes remain out of reach, and residents in areas like the Massou region have been told by authorities to “take up arms” because they lack police protection as their first line of defence. There is. It feels like a crisis to me.

Some lawmakers have proposed an income tax to cover the budget deficit. They pretend not to know that the only reason to raise taxes is to pay dividends. They also pretend not to know that such measures would exacerbate the exodus of working residents and weaken an already fragile economy. Let’s be honest: PFDs are the most discretionary item in your budget. No other state gives people money for any reason other than being a resident. Other states have income support programs, but these require a “need” test. The closest analog at the federal level is the child tax credit. However, it requires the presence of dependent children and is phased out as income increases. In Alaska, you simply meet the residency requirements and a PFD check will be mailed to you. It doesn’t matter whether a person has millions of dollars in the bank or whether his annual income is one million dollars. Checks will be sent by mail.

Here’s one way to move forward. Let’s only pay PFDs to low-income people, those who need them. Households below a certain income level would receive the full PFD, while higher-income households either would receive none at all or would receive a gradual reduction. For illustration purposes, assume that her 50% of residents exceed the income threshold. Based on the 2023 payments, approximately $500 million would be freed up to cover the state’s critical needs. Interestingly, when that $500 million is paid to high-income earners, at least 20% of that amount leaves the state and goes to the federal government in the form of income taxes. That’s $100 million, or about half of the funding needed in the education bill recently passed by the House.

Don’t wait and pretend you don’t know about a crisis that may already be here. Contact your legislators and state officials. They are good people and your words and voices matter. Offer your support to help them reach their full potential as the leaders of our state and the leaders they aspire to be.

Al Borea He is a retired leadership trainer and former distinguished visiting professor at the University of Alaska Anchorage. He is also a former oil and gas company executive.

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