Special Hello, Goodbye Edition

Oh, Look! The Lobbyists Are In Bloom

The halls of the Capitol were like the desert after its first rain this week: Suddenly, lobbyists sprouted everywhere. There were so many that some even found their way to my off-the-beaten-track hovel on the first floor.

Some were citizen lobbyists. Others were professional lobbyists. Some fell sort of in between: People who were here on behalf of business associations and the like. Heck, I even had a few people who actually live in the People’s Republic of Spenard drop by.

Mostly I had to deliver bad news at these meetings. Not everybody looks to the legislature for money, but most people do. And the dizzying drop in oil prices means there’s less money to go around. So people here looking for more money aren’t likely to get it.

No politician likes to say that and no advocate wants to hear it, but I’m still trying to tell the truth as I see it. Probably means I’m not much of a politician anyway. And that’s just fine with me.

Scratch One Attorney General

The attorney general resigned this week. Talis Colberg joined a long list of top legal beagles who left while the governor who appointed them was still in office. In fact, of the 19 men and one woman who have held the job since statehood, only two attorneys general made it through as much as a governor’s four-year term: Av Gross (1974-1980) and Bruce Botelho (1994-2002). So Colberg’s two years in office aren’t at all unusual.

There’s a lot of speculation about whether Colberg quit or was fired and, if he quit, why. Some people think it was the typical thing: The attorney general has only one client, the governor, and their enforced togetherness sometimes chafes. Others point to Colberg’s immersion in the feral politics imported to Alaska when Gov. Sarah Palin decided to run for vice president.

But I never thought Colberg was a particularly good match to the job in the first place. Anybody who is successful at running a state agency has to have a little politician in him, and Colberg had none. He didn’t seem to be the kind of person who could charm a legislative committee or go toe-to-toe in the inevitable bureaucratic infighting that erupts in any administration. I think he’ll be happier in his one-man law office in Palmer.

There’s Only Bad News and Worse News

If you thought the budget news was bad so far, get this: There may not be any money to pay a permanent fund dividend this year.

Here’s why. Because of the rotten economy, the fund’s investments aren’t doing so good. Its current value is $1.5 billion or so less than the amounts put into the fund over the years. Those amounts constitute the principal of the fund.

The principal is protected by the constitution, so it can’t be spent. Not by the permanent fund corporation. Not by the governor. Not by the legislature. Not by anybody for any reason unless and until the constitution is changed

So unless the permanent fund earns a pile of money in the next six months or so, there will be no money to pay a dividend.

Oh, if only it were that simple.

Because the permanent fund does earn money, even if it doesn’t earn enough to offset its losses. Those earnings go into an earnings reserve. An attorney general’s opinion by Greg Renkes – the evil that men do really does live after them – claims that money from the earnings reserve can still be spent on dividends even when the value of the fund principal is dropping.

Under this theory, we could keep paying dividends until the value of the permanent fund reaches zero, simply by spending the earnings instead of doing what we should do: Depositing them in the principal of the fund to help offset the overall losses.

Why would we spend the fund into oblivion? Because no governor wants to be the one to say: Sorry. Really bad year in the market. No dividend.

Would that be bad politics? You betcha. But the truth is the permanent fund was not created to pay dividends. It was created to protect excess money until we need it. And if there’s a conflict between paying a dividend and obeying the constitution, I know where I stand. How about you?

Best wishes,