On April 1, 2020, Commonwealth North hosted a debate “How Permanent is Permanent?” between Ralph Townsend (ISER Director) and Craig Richards (chair of the Alaska Permanent Fund Corporation Board of Trustees and former Alaska Attorney General.) Because of the COVID-19 restrictions on meetings, the debate was conducted via Zoom.
The debate was about the role of inflation-proofing now that the legislature has enacted a “percent of market value” (POMV) standard for withdrawals from the Permanent Fund Earnings Reserve Account to fund state government. Ralph defended the “pro” side and Craig the “con” of the following resolution:
“Resolved: After the adoption of the Percent of Market Value (POMV) draw methodology by the legislature, the concept of “inflation proofing” should not be included in the statutes that govern Permanent Fund management.”
Ralph argued that the 5% POMV is already set to account for inflation. He also argued that automatic inflation-proofing runs a dangerously large risk that the POMV cannot be paid in some future year. Craig argued that inflation-proofing is still required to build real value in the principal of the Permanent Fund. While acknowledging that the current inflation-proofing formula runs a higher risk of not being able to pay the POMV, he argued that the inflation-proofing formula could be adjusted to manage that risk.
Commonwealth North collected audience input both before and after the debate on their position on the resolution. By a very small margin, the audience supported the resolution both before and after the debate. It would appear that the debate did not change many minds in the audience.
ISER would like to acknowledge the generous donations to the ISER Excellence Fund (through the University of Alaska Foundation) that helped sponsor this debate.