Watching frazzled legislators don Xtratufs and slosh around in puddles of red ink as they grapple with Alaska's most recent budget dilemma -- Cadillac wants, Kia dough -- has lost its allure.
It was amusing initially, but the comedic value is, well, kaput! The real fun is slated this weekend when members of Gov. Bill Walker's transition team and other Alaskans arrive in Fairbanks. He invited them for a three-day budget gabfest to yak about, among other things, "revenue options."
Ah, revenue options. It sounds so innocuous, but it could mean government rooting around in your pocket. With more than a $5 billion budget and $2 billion in oil revenue, Alaska needs money to make ends meet. Now, we are using savings but those accounts will be emptier than Old Mother Hubbard's cupboard in the blink of an eye. The state must find revenue or squeeze government to virtually nothing, something many would cheer.
So, choose your poison, er, option: an income tax; a sales tax; a school head tax; or, a tax to be named later. Then, there are the Permanent Fund earnings and our sacrosanct fund dividends -- now an entitlement and the bane of sound Alaska fiscal policy since their adoption by a single vote in 1980. (Former Gov. Jay Hammond believed dividends would protect the fund, and they have -- far too well.)
We should have seen this coming. After all, our fiscal plight is déjà vu all over again. In 1986, an oil glut shoved prices over a cliff, ending unprecedented growth and state spending in Alaska at a terrible economic cost. Rising prices sparked a recovery of sorts by 1990, but production was slipping and in the 1990s, the economy slowly circled the drain.
By 1999, with oil dipping as low as $9 per barrel -- a big sockeye brought more than a barrel of crude that year -- the state was desperate. It asked Alaskans in an advisory vote for permission to spend part of Permanent Fund earnings for government -- daring to touch the third rail of Alaska politics. Voters said "no" by nearly 84 percent. Oil prices shot up just a few weeks later, saving the day, but politicians were cowed.
Chronic budget woes continued to plague Alaska and while there was tax talk, then-Gov. Frank Murkowski convened an advisory panel of 55 Alaskans in Fairbanks and it recommended using a portion of fund earnings for government. The Legislature balked; rising oil prices saved the day -- again.
Over time, Alaska has considered many ideas for leveling fiscal peaks and valleys. Treating the Permanent Fund as a Percent of Market Value plan. The late Roger Cremo's plan, which would lump every state resource into an endowment and use its earnings for government and dividends. A suggestion we borrow against our assets to fund government. Economist and UAA professor emeritus Scott Goldsmith's view that we can manage income from oil revenues and earnings from all our financial accounts to sustain a healthy dividend and $4.5 billion budget. There have been others, too, such as capping dividends or dumping them. But here we are again, sending folks to the City on the Edge of Nowhere.
Along the way, we have been treated to the liberal left's incessant infatuation with Norway's $900 billion, oil-fed sovereign wealth fund, set up to pay pensions in that socialist welfare state when the oil tap runs dry. Its proponents hint Alaska's fund would be much bigger except for -- you guessed it -- Republicans playing kissy-face with the oil industry. What the liberals do not often mention is that 4 percent of Norway's fund can be used for government annually, and Norwegians get no dividend.
Applied to our measly $55 billion fund, that would mean saving $1 billion a year in dividends now -- not to mention the billions paid out since 1976 -- and, at 4 percent, it would mean $2.2 billion available this year for government, which would just about solve our budget problem.
The solution is not rocket science. Paying a state income tax -- nirvana for the left -- or a sales tax or a head tax when fund earnings painlessly would fix our problem, just as the fund's creators envisioned, is stupid. Taxes are pay cuts for working Alaskans. Taxes are doubly dumb when you consider fund managers say using some of the fund earnings would not affect dividends.
Be prepared for utter insanity in the coming weeks and months. This particular subject drives the loons to absolute distraction.
You may, indeed, need your Xtratufs, too -- but not for red ink
Paul Jenkins is editor of the AnchorageDailyPlanet.com, a division of Porcaro Communications.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com.