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An especially helpful email response.
New thought: Paper forms instead of web site.

I have received a few email responses from Alaska legislators or their staff members, in regard to my idea for a check-box to voluntarily donate one's PF dividend to the State's general fund.
The emails are each basically a couple of sentences long, thanking me for my idea and saying (perhaps) they will look into it. I appreciate all responses.

But just within the last few days (late May 2016), I received an exceptionally helpful email response. It gave me new insight.

The email was courteous and complimentary, but ultimately was not in support of my idea. But it was very valuable to me because it elaborated with some reasons. I will pluck out a few key points from the email that were especially helpful in giving me some new ideas:
The email writer indicated that:

Those are the 3 key points (above) that I wanted to bring forth from the email.
It is not my intention to discuss oil taxes or exploration subsidies here.

I think it was the 3rd key point "irresponsible to ask our citizens to help out..." that turned a light bulb on for me. I had a strange and new thought. I do not mean to imply that the email writer might have a similar thought as mine or that they would in anyway agree with my new thought.
Let me just say that their email was a catalyst to this "off on a tangent" thought.

My thought is this:
The legislators are proud people. The State of Alaska is a proud institution.
A check-off box on the PFD web site application that makes it easy to donate ones PF dividend to the State's general fund might be viewed by some as a panhandler begging for a handout. I never thought of it that way, but some people might look at it that way.
After all, the PFD application is a place where citizens come to seek "manna from heaven". It's not supposed to be the other way around where the "angels in heaven" come down to earth with a beggar's cup in their hand.
Of course there is the "Pick Click Give" feature on the PFD application web site. But that is just a bunch of little charities and organizations that are "begging" for a handout. It is not the State of Alaska.

The PFD application web site is viewed by thousands of people. For that reason I thought it would be a good idea to have this check-off box there, not just as an easy way to collect some funds for Alaska's general fund, but also as an educational tool to let people know about the deep financial trouble the state is in.

But it's possible that some legislators, at least on a subconscious level, might be worried about a negative perception by some people, and how that might reflect on the state legislators.

So here is a new idea:
Forget about the web site - go with paper forms.

Instead of having the special check- off box on the PF dividend application website, where everyone can see it, have it on a plain black and white paper form where no one will see it, except for a few people (like me) that would go out of their way to request this special form. This new proposed form would be very similar to the existing paper PFD application form. It would ask all the same questions to determine if the person is eligible to receive the dividend. But the big difference is that this form would state that the "applicant" does not want to apply for or obtain the dividend. Instead, the purpose of the form is to establish resident status eligibility, for the record. The form would state that the "applicant" will have the option of changing their mind in September and applying for the dividend. (In order to change their mind, they would have to fill out a different form in September.)
(It is not likely that a person would change their mind, but it could happen due to some unforeseen financial difficulties.)

But just like the regular PFD application form, this proposed "eligibilty for the record" form must be signed, mailed in, and postmarked by the March 31 deadline.

Also on this EFR ("Eligibility for the Record") form would be an automatic request to transfer an amount of money equal to the dividend (when it is calculated in September) from the PFD account at the Department of Revenue to the "Reconsideration Account" which is also located at the Department of Revenue.

This "Reconsideration Account" does not yet exist. It is proposed here so that the person who fills out the "Eligibility for the Record" form can change their mind later, and apply to receive the dividend, after all. (This could happen if their financial situation turned for the worse, and they really needed that dividend money.)

The "Reconsideration Account" is a temporary holding tank for money that will ultimately be sent in 3 possible directions:
  1. To the person who originally filled out the EFR (Eligibility for the Record) form who has now, in September, filled out another form (the "September Reconsideration Account" form) and has selected the option that says that he has changed his mind and would like to receive the PF dividend after all.
  2. Back to the PFD account, where the chunk of money (equal to the dividend) had originally come from. The chunk of money would go in this direction if the original EFR form filer person requests it on the "SRA" form.
  3. To the State of Alaska general fund if the original EFR form filer requests it (or casts an "advisory vote") on the "SRA" form.
  • Note: If the original EFR form filer takes no action and does not fill out an "SRA" form, then that chunk of money will be considered unclaimed and undesignated, and will be drained out of the Reconsideration Account at the end of the year and be deposited into the general fund of the State of Alaska.  

The whole point of this is so that a person who feels that they can do without the dividend can encourage the flow of a chunk of money to help fill in Alaska's budget deficit.

Note the 4th bullet point in the box above: "If the original EFR form filer takes no action...".
I believe this person will not be subject to any federal tax on the PFD that he could have applied for but specifically said he did not want to apply for or receive.

The proposed "Reconsideration Account" is a necessary element of this tax free idea.
This is to help keep more money in Alaska for Alaskans, instead of having it shipped out to the IRS.
If this idea had been instituted in 2015, then I believe I would not have lost $512 to the IRS when I paid my 2015 income tax as I explained elsewhere in this web site.

Let's institute this idea as a test and see what taxes, if any, the IRS wants to impose on a chunk of money that an "applicant" does not want to apply for, and never receives. I believe they will consider it not subject to taxation.

What is the Permanent Fund Dividend Account?
Is it the same as the Alaska Permanent Fund?

No. The Alaska Permanent Fund has about $52 billion in it. It is composed of basically 2 parts:
  • The corpus (or principle) which can never be taken out of the fund and spent. It can only be invested to earn more money for the Permanent Fund. It might be about $43 billion big.
  • The other part is the earnings reserve. It may be about $9 billion. This "earnings" part is the part that can be taken out and spent.
The Permanent Fund Dividend account is a completely different account located at the Department of Revenue. It is much smaller. During the winter it may only have a measly $10 million residual money in it. But every year, in July, the Alaska Permanent Fund Corporation (a division of the Alaska State government) ships over to the Permanent Fund Dividend account a big hunk of money for the purpose of paying dividends to the citizens. This big hunk of money, which could be over one billion dollars, is determined by a formula:
(Approx.) Figure what the average yearly income of the Permanent Fund is, over the last 5 years. In other words, write down the total income that has been earned by the Permanent Fund in the last 5 years and divide by 5. You might come up with an average yearly income of $2.4 billion. Then divide that by 2, which gives $1.2 billion. Send that amount to the Permanent Fund Dividend account. Send the other half that's left over back to the Permanent Fund for inflation proofing.

Just simply don't apply for the dividend???
Remember, it does no good to simply not apply for the Permanent Fund dividend. The dividend money that a person would have received (had they applied) does not go to the general fund to help with fixing the deficit. Nor does it go back to the Alaska Permanent Fund. Instead, it simply stays in the Permanent Fund dividend account where it is dispersed to this year's or next year's dividend applicants.

This paper form idea should be easy for the legislature to do. It has to do with the various subject matters that the Alaska legislature is dealing with in the June 2016 special session.
All that is required is for the legislature to create a little (empty) account (called the "Reconsideration Account"), and create 2 paper forms ("Eligibility for the Record" form and "September Reconsideration Account" form).

Because this is all just on some obscure paper forms rather than being shouted from the rooftops on the PFD application web site, there is no embarrassment factor for any of the legislators.

The reason to do this is not for the State to beg for money, but rather, to help a poor citizen who is urging that this be done, so that he can help out without losing a bunch of money to the IRS.
And it is not just for 1 citizen. There are surely many more citizens of like mind who do not want to see our state go over the financial cliff and who want to do something to help.

Granted, that the likely amount of money moved into the general fund with this idea is a very small amount compared to the $4 billion budget deficit. But it is the sentiment that counts. We need to develop amongst ourselves the attitude of accepting and enduring more necessary cuts in the budget.
We the people should build the sentiment in ourselves that we are willing to roll up our sleeves and do what is necessary to get to a lean and sustainable budget.

Also, I think there is something special about voluntary contributions. Whether it is a private charity or government, I think it makes the recipients sit up and take notice. They will think to themselves: "This contributor could stop contributing anytime, so we better utilize this money wisely, properly and efficiently." This will help encourage good stewardship of the money because the recipients want the contributions to continue.

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The email writer that I mentioned above, stated:
"It would be irresponsible to ask our citizens to help out while maintaining an inefficient and ineffective budget."

Well, that is OK for that email writer to feel as they do. They no doubt feel there is more that the legislature can do.

But by the same token, I feel it would be "irresponsible" of we citizens not to help out, at least in some small way. We citizens do not want to see our state's credit rating downgraded again due to being unable to devise a balanced and sustainable budget. That will hurt our chances for ever getting a self supporting natural gas pipeline.

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Written by Randy Griffin
PO Box 73653, Fairbanks, Alaska, 99707
This page first created on May 30, 2016