I had a friend tell me years ago after I testified in front of the Legislature that I had a “terrible poker face when it came to politics”. My response was “thank you,” which really caught him off guard. I know he meant it as constructive criticism but I took it as a compliment. I’ve never run for office (and do NOT plan to) but certainly have spent considerable time in the political arena. I aim to solve problems, not just say what’s needed to keep a job. Being blunt and honest has always been my go-to position and it has served me well.

As I continue my blunt messaging, I might as well not start pulling my punches now. And why should I when the full Permanent Fund Dividend (PFD) promoters keep placing a bounty of ammo at my feet each week! I listened to a promoter of the full PFD movement go off for 30 minutes on a morning talk radio show earlier this month about how paying out the PFD first was “Hammond’s intent.” If your core stance has shifted to the shaky, non-binding concept of intent language that is over 40 years old, I believe you have officially lost the battle and need to be more constructive with your time in helping Alaskans solve this problem.

Let’s quickly address what “intent language” is and more importantly is not. Intent language is generally added to the back of a bill to help explain what a legislator hopes will happen. Look at intent language in the budget passed just last year. It is an expression of good intentions which can be very helpful as a vehicle to better understand what the Legislature is attempting to accomplish. “Intent language” helps clarify a position. What “intent language” is NOT is BINDING or enforceable. Never has been, never will be. And Hammond definitely knew that.

I am certainly not a historian and do not know if Hammond tried to put his “PFD must be paid first” in binding statute. Perhaps he did, got pushback and decided to settle for “intent language.” Regardless of what happened back in the 1980’s, it appears the full PFD leaders are now hanging their hat on this broken, non-binding, unenforceable limb.

There is a very specific reason they are now pushing Hammond’s intent language of “pay the PFD first.”

The full PFD promoters have completely lost the conversation and they know it. They know statewide taxes will have to be implemented under the next governor’s tenure. With the full PFD being such a prominent, oxygen sucking topic for over a decade now, we all know new taxes go hand-in-hand with paying any level of PFD, especially the full PFD.

If they can “move” the payment of the PFD to the front of the expenditure train and make it appear as though the percent of market value (POMV) draw or oil revenue is paying for the full PFD, they can then say new taxes are actually to cover education, or public safety, or health care or anything other than the full PFD. That’s not how budgeting works especially when the full PFD takes up half the entire budget. You can’t hide it as the first expenditure and think smart Alaskans won’t notice what you’re up to.  

Alaska is facing serious financial problems today that the next governor will be forced to address. My main issue now is the lying and deceit that is being bandied about by the PFD promoters and politicians who know that the economics of a full PFD no longer work. Their blatant manipulation does not hurt me or many other Alaskans who do not depend on the PFD government check.

It crushes me, however, when I see a young couple seated at a Bernadette Wilson event (I will use her as an example because she has plainly stated her position on the full PFD issue) as she professes that if you just vote for her, then she will get that family of four $16,000 instead of the $4,000 that was actually provided. Giving that family false hope is sad and pathetic to say the least. Why can’t those running for office give that young family hope based on an actual realistic plan? I’ll go out on a limb and assume getting elected is more important than telling the truth.

I no longer need to pick on Bernadette exclusively though when it comes to the PFD delusion. We have a newcomer who stepped out recently with a mindboggling statement. I’d really like to cut Republican gubernatorial hopeful Matt Heilala a little slack since he’s new, but he apparently doesn’t understand the executive & legislative branches roles (or basic economics).

He made a statement recently to a Fairbanks Republican group that is just too disturbing to overlook. He apparently said we just need to cut spending to pay a full PFD and that it’s on the Alaska Legislature, not him, to figure out the PFD issue. Strike ONE and strike TWO! Matt, Alaska needs leaders and if this is the foundation of your fiscal plan for our great state then you need not apply. Believe it or not, as the potential executive branch leader, you would actually have a pretty big role in all of this.

Matt, Bernadette, and anyone else running for governor who are about to make a foolish PFD  statement, here is the high-level situation we find ourselves: A full PFD plus the most recent budget is about $8 billion dollars. The two revenue streams we have are 1) the POMV draw from the Permanent Fund of $4 billion and 2) oil revenues of about $2 billion (if oil prices don’t fall). That leaves a $2 billion gap. All you are tasked with here is simply telling Alaskans how you plan to extract $2 billion from the Alaskan economy or cut the budget by $2 billion (or a combination of the two). And that is EVERY year, not just once.

I do want to emphasize what my intentions are in these columns I’ve been writing and why I’m so blunt in my delivery. I was fully behind the full PFD for many years and enjoyed the free government check when the economics allowed that program to work, and boy did it work for Alaskans. “We had a great run” is not a phrase I use because I think the best is behind us and we’re doomed. I use it as a launching pad to point out that times have changed and so must the approach Alaskans must take moving forward to secure the fiscal future for the sake of our kids and their kids. It is painfully obvious to those who know better that the numbers no longer work. We had a great run of free cash for 40+ years but the economics changed and so must our approach for the future of Alaska.

But if I am wrong and a politician or a full PFD leader can explain to me, and please show your work, how we can fund the budget AND pay a full PFD with the revenue streams we currently have, I’m all ears. Or if they have new revenue proposals to fill the gap, let’s see them. And please include how extracting the revenue needed from working Alaskans to fund the budget beast and full PFD will affect the economy. Do not send me a seven page article that ultimately makes me go back through several times looking for the simple math. As I pointed out earlier, the annual hole would be $2 billion. Tell me what the income and/or sales tax rate would be, and how much more you will take from the oil industry and how that will affect their capital investments.

Here is a party conversation exercise I’ve actually had with full PFD types or bloated government fans. Strike up this conversation – in simple terms, if someone makes $100,000/year, how much will they make over five years? Simple right? $500,000. Here’s where it gets fun. Ask them how much in taxes that person will pay the state at a hypothetical 50% income tax rate. They will do the math in their head and come up with $250,000 in taxes. Now ask how much the state will collect if the tax rate were 90%. Let the hamster run on the wheel in their head for a few moments then abruptly ask them why are they even doing the math? Don’t you understand any sane individual will pay that oppressive tax ONCE then leave the state? You won’t get another dime in taxes from them in years 2-5 because they will be gone.

This is obviously an exaggerated example to make a point on the tax discussion Alaska WILL be having in the next few years. But that is the fine line any government walks when introducing a new tax. Alaska has developed unrealistic spending expectations over the past several decades. Attempting to extract enough revenue from working Alaskans through an income tax and sales tax to even merely support this beast of a budget, much less any level of PFD, will be crippling to our economy.

We can no longer accept bumper sticker quotes on stump speeches from politicians. The next governor will have no choice but to be the one who must face this trainwreck of a budget problem. And like Hammond, their “intent” will no doubt be noble, but will their revenue plan cover their expenditure plan and be binding? They better be prepared with an actual plan and not non-binding intentions. Alaskans deserve the truth.

Bruce Tangeman has been an Alaska resident for 34 years and currently calls Anchorage home. He has served in a variety of leadership positions inside and outside of state government, including as Governor Dunleavy’s first Revenue commissioner. He has also served as vice president and CFO of the Alaska Gasline Development Corp., deputy commissioner for Department of Revenue, CFO of Doyon Utilities, and a fiscal and budget officer for legislative and executive branch divisions.