Supporters of an effort to repeal oil tax cuts approved by the Alaska Legislature in 2013 wave signs along an Anchorage street in August. (Becky Bohrer / Associated Press)
On August 27, 2014, Alex DeMarban writes in the Alaska Dispatch News:
Acting Revenue Commissioner Angela Rodell announces the 2013 Permanent Fund dividend amount. This year’s payment is expected to be more than double last year’s.Loren Holmes photo
The annual Permanent Fund dividend that will be distributed to qualifying Alaskans in a little more than a month is projected to be worth $1,930.49, give or take $100, according to an analysis by Alaska Dispatch News.
At that amount, the check would more than double last year’s $900, a boost that comes because the distribution is based on fund revenues over five years. The dismal year of 2009, when the fund’s overall value declined as the nation was mired in recession, drops out of the equation.
Alaskans might think the dividend should be higher this year than it was in 2008, and certainly more than it was 14 years ago.
After all, the state’s qualifying population has only grown 8 percent since 2000, while the fund’s value is up sharply. On June 30, the fund ended the fiscal year in record territory, topping $50 billion for the first time ever, according to the fund’s unaudited numbers.
The fund, driven by the state’s royalty oil and the value of investments such as stocks, bonds and real estate, was worth:
• $28.1 billion at the end of 2000
• $36.5 billion at the end of 2008
• $51.2 billion at the end of 2014The reason Alaskans won’t see a record distribution involves federal monetary policy for the last six years. About one-fourth of the fund (roughly $12 billion) is invested in bonds. But interest income from the fund’s bond investments has dropped sharply in recent years as the feds have held down interest rates to stimulate the economy, said Mike Burns, the fund’s executive director.
“The difference can absolutely almost all be allocated to the bond portfolio,” he said.
Income from bonds was:
• $672 million in 2000
• $549 million in 2008
• $278 million in 2014Fortunately, other investments have picked up the slack in recent years to offset the dip in interest income, including greater stock dividends and rental income.
Also in 2007, the fund began investing in global infrastructure, such as the Gatwick and City airports in London, a wind farm in Southern California, and ports in Brazil and Australia. The state owns a portion of those projects and about 25 other facilities that provide a reliable stream of income.
“These are steady earning assets with high barriers to entry. No one is building another port to compete with you,” said Burns.
Add it up, and the fund is transferring $1.23 billion to the state division that sends out the checks, slightly less than was transferred in 2000 and 2008.
The fund experienced a great year, with positive returns in all asset classes and its value growing 15 percent.
“You have different (kinds of investments) because every dog has its day,” Burns said. “This year, all the dogs had a good day.”
The revenues could have been better, but the fund has reduced its stake in stocks from prior years — the stock portfolio is $22 billion — to reduce risk.
Around 2000, the fund was about 60 percent invested in stocks. Now it’s less than 50 percent, Burns said.
“We’re more risk-averse than we used to be,” Burns said. “We’re always looking for the best balance. We want the portfolio to have that all-weather concept.”
The Alaska Dispatch News analysis of this year’s check was done with the formula used by the state to determine dividend amounts. That includes data including the fund’s overall payout to the dividend division, estimated administrative costs necessary to distribute the dividends, and an estimated 625,000 recipients.
Dividend payments will be distributed electronically and in the mail on Oct. 2.
The lead-in photo caption “The oil companies don’t own the oil, ALASKANS DO!” is telling of a growing segment of the American population that is challenging the conventional notion that our natural resources can be owned by narrowly owned extraction companies.
While Alaska’s government agency, which taxes the oil companies operating in Alaska, uses the term “dividend” this is really not a dividend in the sense that it is not tied to individual citizens owning shares of a economic development corporation or Citizens Land Bank corporation. Instead this is an annual amount of money tied to a tax on the oil companies that is paid out from the tax revenues collected by the Permanent Fund, a government agency.
A far more powerful alternative that would directly benefit EVERY Alaskan citizen would be to incorporate a Citizens Land Bank, which would own the public lands under which the oil fields lie and would otherwise acquire ownership of other landed oil fields.
The Citizen Land Band would be a for-profit, professionally-managed, citizen-owned-and-governed community land planning and development enterprise, designed to enable every citizen of a community of any size to acquire a direct ownership stake in local land, natural resources and basic infrastructure.
The Citizen Land Bank would be a social vehicle for every child, woman and man to gain, as a fundamental right of citizenship, a single lifetime, non-transferable ownership interest in all the Bank’s assets, share equally in property incomes from rentals and user fees from leases or use of the Bank’s assets, accumulate appreciated equity values from enhanced land values, and gain an owner’s voice in the governance of future land development.
The Citizen Land Band would serve as an innovative legal and financing tool empowered to borrow on behalf of all citizen-shareholders and service the debt with pre-tax dollars to meet the land acquisition, capitalization and operational needs of the Bank. The CLB would shelter from taxation the equity accumulations of citizen-shareholders and protect the outside assets of the citizens in the event of loan default or if the enterprise fails.
The Citizen Land Band would serve as a social tool designed to encourage a just, free and non-monopolistic market economy. It applies the democratic principles of equal opportunity and equal access to the means to participate as an owner as well as a worker. It demonstrates that anything that can be owned by government can and should be owned, individually and jointly, by the citizens.
The Citizen Land Bank is a major feature in a proposed national economic agenda known as “Capital Homesteading for Every Citizen,” which is designed to reform existing monetary, credit and tax barriers to provide every American an equal opportunity to share in the governing powers and profits from new entrepreneurial ventures, new technologies, new structures, and new rentable space built upon the land. Capital Homesteading offers a “Just Third Way” of reversing unsustainable federal deficits and debt, and revitalizing and growing the American free enterprise system in a sustainable and environmentally sound way.
With a Citizen Land Bank in place Alaskan citizens would generate income by leasing conditioned rights of natural resource extraction to the oil companies wanting to profit from such extraction. In this way the land and the natural resources would truly Be Owned by Alaskans, each owning an equal share of the assets and benefiting from the income generated.
For more information on the Citizens Land Bank see http://www.cesj.org/?s=Citizen+Land+Trust
http://www.adn.com/article/20140827/estimated-1930-alaska-pfd-big-no-record
