The Alaska Permanent Fund and Alaska’s Economy
A responsible vision for Alaska’s future
While oil revenue has largely funded the state of Alaska for nearly five decades, oil can no longer support it alone. Alaska’s Permanent Fund is the envy of any other state. If managed responsibly, the Permanent Fund will fund our present needs, as well as the needs of future generations, indefinitely.
Alaskans for Common Sense supports the largest dividend we can responsibly afford by following disciplined guidelines to ensure sustainability.
We could have it all if we do the following:
Avoid Unnecessary Taxes
Do not increase taxes on current resource industries, businesses, or individuals in a manner that threatens further investment, economic development and prosperity for Alaskans. It is possible additional taxes could be needed to support essential services in the future, but it would make no sense to impose higher taxes simply to pay out an unsustainable dividend.
Don’t Overdraw the Permanent Fund
Do not violate the annual 5% POMV (Percent of Market Value) draw from the Permanent Fund. This 5% allowable draw is the law and is an effective spending limit on government services and the dividend. Overdrawing the fund is reckless. It reduces long-term earnings and our ability to pay dividends, maintain low taxes and support essential state services. This discipline would sustainably preserve the Permanent Fund for our children.
Don’t Annihilate Essential Services & Infrastructure
Do not destroy essential state services or capital investment. We must be responsible in our spending, and continue to cut unnecessary expenses, while still supporting the essential needs of Alaskans. Annual investment in infrastructure, deferred maintenance and education is critical for future economic growth.
Facts:
- An annual $1,000 dividend costs about $635 million per year. A $2,564 dividend costs about $1.63 billion.
- A 2% statewide sales tax would raise approximately $300 million (depending on exemptions).
- A state personal income tax would net approximately $500 million a year at a rate of 2% on annual gross income.
- An increase of 8 cents per gallon in the motor fuel tax would raise $35 million per year.
- In December 2021, the Alaska Department of Revenue projected total state general fund revenues for the fiscal year ending June 30, 2022, at $5.7 billion ($2.275 billion from oil and other taxable resources, plus $3.08 billion from the draw on Permanent Fund earnings). Last year, state general fund revenues totaled $4.78 billion, with more than $700 million going out as dividends of $1,114 to every eligible Alaskan. Higher oil prices are pushing this year’s state general fund revenues above expectations. (See chart on oil price volatility.)
- From 1982 to 2021, the average dividend has been $1,163.
“Alaskans should expect our leaders to preserve the Alaska Permanent Fund, pay sustainable annual dividends, avoid destructive taxes and continue to provide essential services. Anything less is irresponsible.”
Carl Marrs, Chair, Alaskans for Common Sense