The Alaska Permanent Fund Dividend and Membership in the State's Political Community

• Publication year: 2012

§ 29 Alaska L. Rev. 79. THE ALASKA PERMANENT FUND DIVIDEND AND MEMBERSHIP IN THE STATE'S POLITICAL COMMUNITY

Alaska Law Review
Volume 29, No. 1, June 2012
Cited: 29 Alaska L. Rev. 79

THE ALASKA PERMANENT FUND DIVIDEND AND MEMBERSHIP IN THE STATE'S POLITICAL COMMUNITY

Christopher L. Griffin, Jr. ^[*]

Abstract

Despite decades of unmitigated administrative success, the Alaska Permanent Fund Dividend (PFD) is not immune from political and legal controversy. The symbolic and financial importance that Alaskans ascribe to their annual dividend checks has generated disputes between ordinary residents and executive agencies over eligibility. Litigation concerning three dominant status requirements-minimum residency, U.S. citizenship, and felony incarceration-reveal not only the extent to which Alaskans will pursue what they believe to be valid claims on their share of natural resource wealth, but also the limits of full political membership in the state. This Comment frames a sample of the Alaska Supreme Court's decisions on PFD eligibility in terms of membership in Alaska's political community. The PFD reflects the Alaska Legislature's opinion about valid beneficiaries from oil revenues, and the state courts police eligibility at the margin. This Comment therefore argues that the Alaska Supreme Court implicitly determines, on the basis of statutory intent and administrative rule interpretations, "insiders" and "outsiders" within the state's political community.

Introduction

Alaskans are separated from their fellow Americans not only by an expanse of British Columbia but also by their enlistment in one of the most generous social welfare programs in the country. Since its inception, Alaskans have received on average $1,100 per year between 1982 and 2010 from the Permanent Fund Dividend (PFD). ^[1] Our understanding of the PFD's long-term economic consequences remains spare, but reliable anecdotal evidence suggests that many of the state's residents are well aware of their annual benefits. ^[2] Alaskans await their dividend payments before making important household purchases, and businesses engage in observable price competition for a larger share of consumer spending with dividend funds. ^[3]

But the PFD's import is not limited to the extra dollars and cents that accrue to qualified Alaskans each year. A fairly robust conversation conducted by political philosophers and economists about the future of liberal-progressive economic programs surrounds the PFD. ^[4] Indeed, political economists analyzing asset-based welfare systems ^[5] have long shown interest in the PFD, especially as a blueprint for similar initiatives in other parts of the world. ^[6] Because the program's administration is relatively straightforward and uncontroversial, however, legal scholarship includes relatively little discussion of the PFD. ^[7] This underrepresentation among legal academics and practitioners is both lamentable and ripe for correction given recent debates about the privileges of state residency and national citizenship. ^[8]

This Comment connects the PFD's economic salience to broader points about the relationship between law and membership in a political community. On its face, the PFD's enacting legislation simply confers monetary benefits on a well-defined portion of Alaska's population. Dividend payments carry no strings; they are disbursed on a means-independent basis, and the state takes no stance on how residents spend the money. Thus, the program is almost completely universal in coverage and neutral with respect to use. Probing a bit more deeply, though, we should understand the PFD both as the United States' most significant experiment with a universal asset policy and as a signifier of full participation in the state polity. Evidence for the latter appears in several judicial decisions demarcating the often-shifting boundary between eligible and non-eligible recipients. Resolving these disputes may have a negligible effect on overall PFD outlays, but the answers provided partially suggest who "counts" as full members of the state's political community. To that extent, what might appear as marginal choices about membership in this community might actually say a great deal about its fundamental norms and values.

This Comment is organized as follows. Part I briefly explains the PFD's history, structure, and performance. Part II reviews state court decisions on three barriers to receiving dividend payments: the minimum residency requirement, American citizenship, and felony incarceration. In all three cases, the Alaska Supreme Court has declined to recognize constitutional and statutory violations for failure to receive dividend payments when the plaintiff does not meet the status requirement. Part III considers the extent to which these judicial opinions reveal a broader understanding of who the state considers full participants in the political community. On this reading, receipt of dividends does not necessarily signify an individual's direct participation in political decision-making. Rather, this Comment argues that it entrenches a notion that political citizenship "runs with the land." Only those who legally call Alaska territory home for a sufficient period of time will reap the abundant benefits from the ground beneath their feet.

I. A Brief Overview of the PFD

The PFD sprung to life in 1980 through legislation spearheaded by Governor Jay Hammond. An institution known as the Alaska Permanent Fund (APF) was created in the preceding decade, but the APF had no overarching purpose. ^[9] It was partially a state-run investment vehicle and partially a source of capital funds for large-scale development projects. ^[10] Hammond's intervention was indispensable for reorienting the Fund toward its current trajectory. A protracted debate between those who one insider called "loan crazies"-stakeholders pushing for applying APF monies toward significant capital development-and the arguably more prudent preferences of Governor Hammond played out in the last three years of the 1970s and effectively ended with the 1980 legislative session. ^[11]

Governor Hammond's personal philosophy regarding the proper use of the state's bounty ultimately carried the day. As a self-described political outsider, Hammond remained skeptical of concentrating wealth in the government's hands. ^[12] Believing that "the money could be used better by individuals than spent on government programs or invested in development projects," the bill he shepherded set the first dividend payment at fifty dollars and conferred on each adult one dividend per year of residency since 1959. ^[13] The final codified version, which controls dividend payments to the present day, stipulates that: 1) potential recipients apply to the Department of Revenue; 2) be state residents on the date of application and during the qualifying year; 3) be physically present in the state for at least seventy-two consecutive hours during the two years preceding the current dividend year; and 4) meet certain qualifications pertaining to immigration status. ^[14] The statute also spells out further restrictions on the residency requirement. ^[15] The amount of the dividend each year depends on a complex statutory formula but one that has led to reasonably predictable annual payments. ^[16]

The Alaska Constitution explicitly commands the prudent use of the state's natural resources for the general welfare of its residents. ^[17] Article VIII, Section 2 of the Alaska Constitution requires the legislature to utilize, develop, and conserve the state's natural resources "for the maximum benefit of its people." ^[18] Moreover, the 1976 amendments to the Alaska Constitution formally enshrined the new APF. ^[19] By nearly all accounts, the PFD has been a success and followed through on the constitutional promise to use Alaska's natural resources for the greater good:

[In 2011,] [t]he Permanent Fund had an outstanding fiscal year, returning just over 20 percent and ending slightly above $40 billion. This is the first time the Fund's year-end value has closed at over $40 billion and only the third time the returns have broken the 20 percent threshold. . . .

. . . .

. . . Since the Fund was created 35 years ago by Alaska voters, it has paid out $19.2 billion in dividends, more than the $15.6 billion in mineral revenues and other deposits it has taken in, and was still worth $40.1 billion on June 30.

Another way to measure success is the recognition that the Permanent Fund has received from its peers and outside groups. A few years ago, the Peterson Institute ranked the Alaska Permanent Fund as the most transparent of all of the sovereign wealth funds . . . . When the International Monetary Fund led the discussion with other sovereign wealth funds to draft the Santiago Principles for transparent governance, much of the document was based on the Alaska Permanent Fund Corporation's current practices. ^[20]

Much of this success has been tied to the creation of the Permanent Fund Corporation (PFC), also launched in 1980, ^[21] which has contributed significant additional transfers to the Fund. The PFC serves as the investment strategist for the Fund and may only invest revenues in income-producing vehicles according to the prudent investor rule. ^[22] The most significant tension exists, then, not with the structure or management of the APF but with the divide between residents' interpretations about valid claims under the PFD...