A Proposal for a Permanent Fund for Gas Revenues

A Proposal for a Permanent Fund for Gas Revenues
Print this page by Alden Nellis During a recent trip I learned about Alaska’s Permanent Fund. I think a variation of it would be a good idea for Cleburne. In 1974, after the discovery of the Prudhoe Bay oilfield, Alaska got lease checks totaling $9 million. Every legislator had his pet project. In the blink of an eye the $9 million was gone. In 1976 Alaska got its first royalty check in the amount of $734,000. Governor Hammond (a Republican environmentalist and the fifth governor of the state) said “Whoa. Wait a minute! We are not going to squander this money.” After a considerable political process a plan was devised. The simplified summary of the Alaska plan is that at least 25% of all state royalty and lease income is put into a permanent fund for the benefit of the Alaska people. The principal of the fund will never be spent for anything. The fund is invested according to strict guidelines. Interest, dividends, etc. earned by the fund are paid out to the Alaskan people and rolled over into the fund principal according to set guidelines. Each year every person (man, woman and child) who has been a resident of Alaska for a year or more receives a per capita dividend, unless there are no earnings. The dividend has been paid each year for 26 years. The dividend amount in 2007 was $1654.00. The principal of the fund is now over $38 billion. Alaska has a population of only 670,053. That makes the state-held wealth of every citizen $56,716. The well-managed fund earns about 10% per year which is about $5700.00 per citizen. (Perhaps that is the reason Alaska has no sales tax or income tax.) I propose a Permanent Fund for Cleburne as follows: 1) At least one third (33%) of the lease and royalty receipts be placed in the Cleburne Permanent Fund (CPF) as payments are received by the city. The first deposit to the CPF will be calculated by determining one third of all royalty and lease payments received since January 1, 2006. 2) The CPF principal will not be spent for anything nor used as collateral or security for any loan. Only interest, dividends, etc. earned by the CPF principal will be paid out of the CPF. 3) Dividend payments from the CPF will be made annually the last week of the calendar year to qualified Cleburne citizens according to rules set for distribution of funds. To qualify, the recipient must have been a legal citizen of the US and a legal resident of Cleburne for the entire calendar year of the date of the payment, and the recipient must have voted in at least one election (city, school, county, state, or federal) during that calendar year. If the amount of the dividend will be less than $10.00, no dividend will be paid that year and all earnings will be rolled over into the principal. 4) To explore the Alaska Permanent Fund, go to www.apfc.org. To watch a video, go to http://www.apfc.org/view-video.cfm Cleburne should be investing a portion of the windfall income from gas in something that will benefit Cleburne citizens now and in the future, not on something that will benefit a select few now, such as the golf course. The price tag on the golf course will probably be $10 million plus or minus. Add to that about $1.5 million per year for maintenance and operations. The golf course is a bottomless pit. The CPF would be just the opposite. Anyone wishing to help get the CPF established, please contact Alden Nellis at cpupro@sbcglobal.net or phone 817-641-9646 from 10-6 M-F.

by Alden Nellis

During a recent trip I learned about Alaska’s Permanent Fund. I think a variation of it would be a good idea for Cleburne.

In 1974, after the discovery of the Prudhoe Bay oilfield, Alaska got lease checks totaling $9 million. Every legislator had his pet project. In the blink of an eye the $9 million was gone.

In 1976 Alaska got its first royalty check in the amount of $734,000. Governor Hammond (a Republican environmentalist and the fifth governor of the state) said “Whoa. Wait a minute! We are not going to squander this money.” After a considerable political process a plan was devised.

The simplified summary of the Alaska plan is that at least 25% of all state royalty and lease income is put into a permanent fund for the benefit of the Alaska people. The principal of the fund will never be spent for anything. The fund is invested according to strict guidelines. Interest, dividends, etc. earned by the fund are paid out to the Alaskan people and rolled over into the fund principal according to set guidelines.

Each year every person (man, woman and child) who has been a resident of Alaska for a year or more receives a per capita dividend, unless there are no earnings. The dividend has been paid each year for 26 years. The dividend amount in 2007 was $1654.00.

The principal of the fund is now over $38 billion. Alaska has a population of only 670,053. That makes the state-held wealth of every citizen $56,716. The well-managed fund earns about 10% per year which is about $5700.00 per citizen. (Perhaps that is the reason Alaska has no sales tax or income tax.)

I propose a Permanent Fund for Cleburne as follows:

1) At least one third (33%) of the lease and royalty receipts be placed in the Cleburne Permanent Fund (CPF) as payments are received by the city. The first deposit to the CPF will be calculated by determining one third of all royalty and lease payments received since January 1, 2006.
2) The CPF principal will not be spent for anything nor used as collateral or security for any loan. Only interest, dividends, etc. earned by the CPF principal will be paid out of the CPF.
3) Dividend payments from the CPF will be made annually the last week of the calendar year to qualified Cleburne citizens according to rules set for distribution of funds. To qualify, the recipient must have been a legal citizen of the US and a legal resident of Cleburne for the entire calendar year of the date of the payment, and the recipient must have voted in at least one election (city, school, county, state, or federal) during that calendar year. If the amount of the dividend will be less than $10.00, no dividend will be paid that year and all earnings will be rolled over into the principal.

4) To explore the Alaska Permanent Fund, go to www.apfc.org. To watch a video, go to http://www.apfc.org/view-video.cfm

Cleburne should be investing a portion of the windfall income from gas in something that will benefit Cleburne citizens now and in the future, not on something that will benefit a select few now, such as the golf course. The price tag on the golf course will probably be $10 million plus or minus. Add to that about $1.5 million per year for maintenance and operations. The golf course is a bottomless pit. The CPF would be just the opposite.

Anyone wishing to help get the CPF established, please contact Alden Nellis at cpupro@sbcglobal.net or phone 817-641-9646 from 10-6 M-F.