Every now and then a think piece shows up from conservative writers considering whether providing a Universal Basic Income (UBI), or a fixed payment to everyone, no strings attached, might be a positive alternative to Great Society-type programs.
I urge all of those considering these arguments to take a look at the cautionary tale of Alaska. As a condition of statehood, Alaska has no private oil and gas rights owned by the state, and the state invested the royalties in a Permanent Fund. Eventually, the money flowing in was so much more than state expenses that the state income tax was rescinded, and a dividend on the fund earnings are paid every year to every resident (depicted here in the Simpsons movie). This Permanent Fund Dividend, or the PFD, is essentially a UBI. The Permanent Fund has ~$60 billion in it, and historically the PFD has been in the $1-2K range. With the natural gas boom going on in the contiguous U.S., royalties on current oil production in Alaska plummeted around 5 years ago, so the previous governor (a left-leaning independent) reduced the dividend, expanded Medicaid by fiat, dipped in to the state’s savings to make the state budget, and proposed reinstating the income tax. Last year, the current Republican governor was elected promising to restore the full dividend (and more), cut nothing of significance, and have no new taxes.
The reality as governor is that he intends to make good on two of three of these promises. So, with a set of 182 line-item vetoes announced July 1, he removed 40% of the state university system’s appropriation, gutted virtually every “safety net” program, and reduced a wide range of other appropriations (overview here with a link to the full list). As someone who lives three miles from the state’s flagship university on a dirt road with no water, sewer or trash pickup, and internet access only available through my cell phone; in a state with no rail connection to North America and no road connection to half of its land area, I think the state government is already pretty lean. Inflation and population-adjusted budgets have been flat for decades.
After the vetoes, the governor called the legislature into a special session for performing the purpose of setting the amount of the PFD. The governor wants it set at $3K in accordance with the traditional way it is calculated (based on Fund earnings). Rather than call the special session in the legislative chambers in the state capitol, the governor called the special session 600 miles away in a middle-school gym in his home town. In the only bright spot of the week, Alaskans got a history lesson on the Declaration of Independence, as commentators noted that convening the legislature in ridiculous places was in the list of grievances against King George.
Thirty-eight legislators, a coalition of all Democrats and Independents, and 40 percent of Republicans would have nothing to do with the middle school and convened in the capitol. They voted 37-1 to override the vetoes, but success requires 45 votes. Twenty-two legislators, all Republicans, showed up at the gym and pretended to look like serious legislators while speechifying with basketball goals in the background; the governor provided no security so at one point a group of chanting kooks took over the gym. The group of tweny-two bills themselves as “Conservatives” and supports prioritization of the PFD over any and all government functions and is adamantly opposed to any form of new tax revenue. Since the Democrats and media love highlighting hypocrisy in Republicans, the only people opposed to describing this group as conservative are the fourth or so of the electorate who are, you know, actual conservatives.
The likely end game here is that the state will turn solidly Blue, perhaps permanently, with our conservative U.S. Senator, Dan Sullivan, coming up for re-election next year. There seems to be a hard ceiling of about half of the Republican party willing to go along with labeling themselves “Conservatives” while sticking their hand out to government screaming for unearned cash, the Democrats want government services expanded not contracted, and the Independents favor a status quo on services and some combination of reduced PFD and modest new taxes.
In summary, the veto override failed, Alaska has $60 billion in the bank, and on Monday the university system will likely declare financial exigency (the university version of bankruptcy). The likely outcome is that ~1/3 of the UA system will be laid off, and tuition will probably be doubled. In Fairbanks, the state’s second-largest city, UAF drives about half of the economy (an army base drives the rest), so economic collapse is predicted here. As someone who moved here from Texas some years ago, my observations of Alaska culture are that the PFD has been a major factor in precipitating the societal rot that has gotten the state to this point.Published in