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Money, money, money….

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Isn’t it about time Alaskans give Penny and the late Ron Zobel the recognition  they deserve for altering history in a way no one could have guessed 30 years ago.

Largely due to the Zobels, Alaskans are today engaged in a Permanent Fund Dividend fight that has some people calling for the recall of Gov. Bill Walker.

Whether you support Walker’s plan to cap the PFD payout to Alaskans in order to use some of the earnings of the Permanent Fund to pay the costs of state government or oppose that idea, you have to concede the game changers the Zobels turned out to be.

If, of course, you have any idea as to the role of the Zobels in the PFD.

Most Alaskans probably don’t given how fast the population rolls over in the 49th state, and readers Outside are surely clueless to a couple who were Alaska villains and then heroes more than 35 years ago.

“Alaska’s Most Unpopular Couple,” TIME magazine called them in a period in American history when TIME was a powerful journalistic voice. The villain status would end as soon as sizeable PFD checks started flowing to anyone calling the 49th state home.

To make a long story short, the Zobels, a couple of attorneys, in 1980 sued to block distribution of the first PFDs. They objected to the plan of  the time, which called for only a $50 payout, but with the distribution set to increase $50 per year for every year the recipient stayed in Alaska for up to 20 years.

Originally a longevity bonus

Under that scheme, someone who’d served their 20 years in the cold, dark north would collect $1,000 while an Alaska newby would get only $50.

The Zobels challenged the plan as illegally discriminatory to newcomers. It imposed, they argued, a burden on interstate travel. Their case went all the way to the U.S. Supreme Court.

All these years later, it seems almost silly to think of a $50 per year payout capped at $1,000 as a restriction on interstate travel, but the Supreme Court bought the argument. The Zobels won their case,  and what had begun as longevity bonus people earned by investing time in the state became something else.

What to call it today is hard to say. An entitlement? Certainly. Welfare for everyone? It sort of sounds like that when some Alaska politicians talk about how losing it would devastate low-income Alaskans.

The PFD wasn’t always seen this way.

The late and revered Gov. Jay Hammond, the self-proclaiming “Bushrat,”  in 1992 told an Associated Press reporter the Supreme Court ruling in the Zobel case was “one of my greatest disappointments.”

Hammond thought of the PFD as something Alaskans should earn by their tenure. He and others understood this isn’t sunny California. To live in Alaska, you have to be tough.The idea was to offer a small reward to those tough enough to hang on for years.

Lure of the PFD

Instead the payouts grew big enough to attract riffraff. The outlaw Papa Pilgrim – one Robert Allen Hale – obtained his hideaway in Wrangell-St. Elias National Park and Preserve with “a $30,000 down payment with cash obtained from the Alaska Permanent Fund,” writer Mark Kirby observed in a 2008 story for Outside magazine.

Pooling the PFD checks from 15 children helped Pilgrim develop a wilderness retreat where he could abuse some of those same children. He finally ended up in jail in for sexually abusing the girls. When he died there, no one shed a tear.

If Hammond thought the original restructuring of the PFD payout a mistake, what would he think of all that has followed? What would he think now with state government facing a $3 to $4 billion deficit and Alaskans pitted against each other over whether to use some of the Permanent Fund earnings to close the budget gap or keep handing the earnings out as PFDs?

How might things have been different under the original plan?

Let’s start with the $1,000 limit. The state last year gave every Alaska resident for whom a PFD application was  filed – man, woman, child, infant, baby – a record $2,072. The total payout to more than 644,000 Alaskans topped $1.3 billion.

At a minimum, the original scheme would have paid out less than half of that, but more likely – given the few getting big checks and the many getting little checks – the pay out might have been a third, leaving the state with about $1 billion in earnings to help close the budget gap.

More importantly, though, the political discussion would have been different with some Alaskans getting big PFD checks but far more getting little PFD checks. Alaska has one of the most fluid populations in the nation. Somewhere between 25 and 35 percent of the populations turns over every five years. These would be the under $250 PFD people.

Somewhere between 5o and 70 percent of the population turns over ever 10 years. These would be the $250 to $500 PFD people. With the state budget in turmoil, how many of the under $500 PFD people would be supporting a continuing PFD payout that gave $1,000 only to a select few?

Not many is a reasonable conclusion.

Times change

There is no doubt the original PFD plan was better designed to adapt to fiscal crisis. But the plan was killed by the Zobels, and now here we are engaged in a discussion about state fiscal policy that is very simple for some:

Give me my money!

That can’t last, of course. The state, like everyone else, has to pay its bills. If lawmakers don’t come up with a budgetary solution, they will be forced to draw down the Permanent Fund Savings to pay the bills.

As the funds in the account decrease, the earnings will do likewise. Both the PFD and Permanent Fund will shrink and Alaska will end up like every other state saddled with big taxes of all sorts to support government.

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7 replies »

  1. I met Ms. Zobel once when I worked for the Dept. of Law. I thanked her for my PFD. We were both polite but I think she knew I was being sort of tongue in cheek because she said most people cussed her out rather than thanking her.

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  2. Adjusted for inflation, $50.00 in 1980 equates to $146.26 in 2016. So to be proportionate to Hammond’s proposal in 2016, 20 year Alaskan residents would have to receive a dividend of $2925.

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  3. Forward budgeting at low end projections needs to be done, should have been policy from the start. We’ve seen oil at over a hundred per barrel and we’ve seen it at a tenth of that. Forward budget and stick to it. That would have limited “drunken sailor” spending which occurred every time Alaska saw an extra nickel.

    The PF was established for rainy days. Juneau expected sunny weather to continue forever. Well, the 100 year storms are hitting. We can’t afford umbrellas or bailing cans.

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  4. Craig, By capping the PFD to $1,000 now, and taking the rest, taxes every Alaskan at the same rate. The ones just getting by pay the same tax as the rich. I am against a state income tax, but would rather see that than to pay the same rate as the rich.

    I wish Hammond had set up 2 funds, one for citizens and one for government. Then they could spend it however they want. And why does a state with so few people have such a huge budget? The legislature just wasted over $30,000 per day for the special sessions, while getting paid and not getting anything done! They should be fined for every day, not rewarded!

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    • the $30,000 per day for the Legislature is really small potatoes. the departments of Education, and Health and Social Services spent that much in the time it took me to type these two sentences. if we want to do something to reduce the state budget, we have to do something with those two agencies which eat up about 60 percent of the money, but nobody wants to touch them. and not to defend legislators too much, but the governor called them to Juneau for those special sessions to do specifically what you didn’t want them to do – cap the PFD at $1,000.

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  5. Why do we need to be like everyone else? Alaska is different and should remain different. The addiction of all Government is money. The more you give the politicians the more they will spend. Just like children.

    Just like children, politicians need to be handled with a little patience but firm expectations. They need to learn to be accountable for their actions. Set boundaries and punish them when they stray outside these parameters.

    Our State Government needs to be scaled back to provide just the bare bones basics for our State. Roads, Law Enforcement, EMS, Corrections, and K-12 schooling. Period.

    Special programs need to find other funding. Charity from the people not the State.

    The PFD should be for the people. Hammond said that we only get part of what we were originally supposed to. The politicians dipped into it from its inception.

    Fire them, recall them, whatever. Balance the budget, period! Spend within your means children.

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    • all true, Pat. but the push-pull is that there are a lot of your fellow citizens out there lobbying them to do the opposite and spend more for health care, for education, for roads, for public safety, to promote business, etc., etc., etc. the problem might be as simple as people having come to expect so, so, so much from government.

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