Why is it that each time I see a proposal to solve Alaska's fiscal problems, it includes a raid on the Alaska Permanent Fund? The Permanent Fund receives only a fraction (25 percent of the state's royalty share) of the money Alaska receives from the companies that tap the oil found on state lands at the North Slope. That's land we the people of Alaska own in common.
It's as if those who would plunder the Permanent Fund have bought retirement homes far from Alaska and want to spend our last hope for our own future rather than pay their share before they leave.
When the Permanent Fund was proposed, I was the president of the state Senate and a close friend and ally of Gov. Jay Hammond, one of the true champions of the fund. We proposed that 25 percent of all money received from oil bonuses and royalties be set aside in a fund for the people. We did not envision the rest of the state's income be blown in a massive feeding frenzy.
Our resource revenue is a one-time benefit for what the state receives for selling a piece of Alaska, be it oil, minerals or other resources that, once harvested, are gone forever.
Jay Hammond's dream was always to give the people the money and make the government claw it back, thus keeping government to a size the people were willing to pay for. But will power is always in short supply. We went on to spend freely as if our wealth had no end, and then to compound our foolish actions, we repealed a large number of the taxes in place before oil.
Well, today oil is no longer and probably never again will be the golden goose that allows us to live high on the hog off one industry. So, tough as it is to grow up, we now must pay our way. The last legislative session balanced the state budget by taking a few billion dollars out of the Constitutional Budget Reserve Fund. The move was legal, but it means that this year we will not have the $260 million this savings account would have earned.
Now we must both cut government spending and increase taxes. As the Alaska people are the least taxed in the nation, it's time we face the reality the time has come.
Take the highway motor fuel tax, for instance. At 8 cents a gallon, it is the lowest in the U.S. The feds help us build our highways, but the motor fuel tax was supposed to cover the cost of maintenance.
However, as the cost of maintaining a mile of highway comes to approximately $65,000 a mile, our tax is a joke. The only stretch of highway in Alaska that pays its way connects Anchorage with Joint Base Elmendorf-Richardson.
The reality is we must pass a number of new taxes and give a hefty increase to others. As a lifelong Republican, I can only say that recommending a large tax increase is tough to swallow, but I immigrated to this land many years ago, and I have children and they have children. We are Alaskans, and I do not want to return to the "good old days." I want my great-grandchildren to have good schools, roads and hospitals.
I hate taxes and all the paperwork, but there is no alternative. The free ride is over.
Will we have to reinstate the state income tax? Yes. Are we going to need a statewide sales tax? Probably.
We need a real royalty and tax on mining, not the old 1872 Mining Law. Our fishing industry is very healthy, but fish are a public resource and we should pay say a 4 percent royalty as well as the taxes we pay now.
No tax should be so large it oppresses the people, or so small it does not do the job.
It's imperative our state legislators avoid kicking the can down the road by doing half a job.
My father, an old warrior, had a saying: "If you take the King's shilling, then fight the King's war." He referred to the old 40 shillings on the drum when a young man joined the British Army.
A legislator has a similar responsibility and shouldn't be in a race for longevity.
Fellow Alaskans, I appeal to you all. Working together, legislators and citizens, Republicans and Democrats, we can still have a great future, perhaps unmatched anywhere.
Clem Tillion is a longtime Alaskan and former president of the state Senate. He lives in Halibut Cove.
Correction: Upon first publication, the preceding commentary incorrectly said that a recent draw from the Constitutional Budget Reserve to balance the budget was "several million dollars."