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The day Alaska's fat cats started spending, they painted a target on the Permanent Fund

  • Author: Clem Tillion
  • Updated: June 25, 2016
  • Published April 16, 2016

I was asked, when I wrote my last commentary recommending a tax regime for Alaska, if I intended to leave the oil industry out. No. I would include everything from face soap to oil wells.

It is not that I want to face all these tax increases, but the day the Alaska Legislature started spending instead of investing oil bonus and royalty income, what has happened this year became inevitable. This is not TV; there is no instant replay. There is only one question: do you want to go back to the stone age, or pay enough tax to have a civilized way of life?

People ask me: Do I miss the good old days? I think back to my youth ... to the look in my wife's eyes that made me feel warm all over ... to what it was like to feel the first baby moving. But then I remember the last steamer leaving in October, and the first not returning until April. I remember the year there was no doctor in Seldovia, and the girl I loved started hemorrhaging after a baby. We drove the dirt track to Seward in a borrowed Army surplus truck, at 20 below zero in Sterling, my wife sitting in the passenger seat bleeding.

The good old days? They were not that good, and I do not want them back. Today, I know Maritime Helicopters is close, and it will, and has come when the sea is rough. Crossing Kachemak Bay to Homer's hospital to welcome a new grandson in his mother's arms is heaven itself for an old man, and I will pay whatever it takes to keep it. At the same time, I am totally enraged with those who spent the principal -- both bonus and royalty -- as if it had no end.

In 1980, when we set up the management system for that small 25 percent of the bonus and royalty we call the Permanent Fund, we also took $900 million out of the general fund and put it into the Permanent Fund as an apology to the people of Alaska for taking that first $900 million windfall and whizzing it up against a wall.

At that time, there was strong pressure among some legislators to give soft loans to the business community instead of a dividend. The province of Alberta, Canada, had done this with its Heritage Land trust, which they lost in total to the recession of 2008. When we set up the management of the Alaska Permanent Fund, Gov. Jay Hammond turned to Elmer Rasmuson of the National Bank of Alaska to show us how to do it. First came inflation-proofing to protect the real wealth of the fund from inflation, and then the rule to never invest in a project the state couldn't foreclose on without political problems.

I see these ads on TV that say, in effect, "If you do not let us steal the Fund, you lose your dividend." Well, when I was a kid, the Germans had a minister of propaganda, Paul Joseph Goebbels, who said in a speech in 1934, "A propaganda that lies proves that it has a bad cause. It cannot be successful in the long run." I am not a lover of our present federal income tax. It has far too many loopholes. I favor a flat tax, but it just ticks me off to see so many who make a good living off Alaska's resources -- be it on the North Slope or in Dutch Harbor -- and pay nothing. The fat cats with their greedy eyes look at that small 25 percent of the bonus and royalty revenue that has been well-managed and invested as if God gave them the right to plunder that, too.

Show me a well-rounded tax regime, few loopholes, and no trying to get the other guy to pay more than you do. Every tax is unfair to some segment of the population, but to ask everyone to pay something is the cost of civilization.

Clem Tillion of Halibut Cove served seven terms in the Alaska House and two terms in the state Senate. He was a close ally and friend of Gov. Jay Hammond and helped Hammond and others design the Alaska Permanent Fund.

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