We had a good run. This phrase was recently recited in conversation and sort of sums things up for many Alaskans. Oil started flowing in the trans-Alaska pipeline June 20, 1977, and ever since, Alaska has been on a good run.
We got rid of our state income tax and our education head tax and started doing something no other state does: giving out identical checks to every man, woman and child residing in Alaska, regardless of their length of residency or income level.
The first Permanent Fund dividend check in 1980 was $1,000, which was supposed to account for the first three years of payouts.
Things have changed significantly since those days. In 1980, the price of oil, when adjusted for inflation, was $116 a barrel. The current price is under $50.
Peak throughput of the pipeline was about 2 million barrels a day in 1988, when it was responsible for 25 percent of total U.S. production. Currently, throughput is about 500,000 barrels a day, which accounts for about 5 percent of the nation's production.
Price and production levels are down since the big years, and the impact of Alaska oil is also down.
We have to address this new reality. We may see some slight increases in oil production and the price may go up, but as a resident of Fairbanks, I don't really want $100 oil.
It makes everything more expensive, especially utilities. Many people left Fairbanks when heating oil was $4 a gallon and no one wants a heating bill higher than their mortgage.
There are two competing views to solving Alaska's fiscal crisis. Both involve restructuring the way the PFD is paid out and will add about $1.9 billion to the general fund. Both sides wanted cuts and many cuts have already been made.
Many on both sides of the aisle say we've cut enough. Sure, there are some targeted cuts that could still be made, but none that will have a huge impact. The cuts that are suggested now face huge political hurdles as was witnessed by the recent proposal to cut the state's Pioneer Homes by $6 million. Try that 100 times over.
There is a major chasm over the issue of whether we need to implement some sort of new revenue to balance the budget. Some argue the PFD restructure will get us 80 percent of the way there.
Even if that figure is accurate, the last 20 percent is significant –- a 20 percent shortfall would mean dramatic cuts, which no one seems willing to identify, and no capital budget for the foreseeable future.
Other revenue sources have been discussed such as an income tax, a sales tax and a head tax. They all have certain pros and cons.
A sales tax will draw from the tourists who visit Alaska, but it is regressive and will also tax many services, such as auto repair, that can add up quickly.
An income tax draws from many nonresident workers and can be progressive or a flat percentage, but many people don't want an income tax even though they may pay less compared to a sales tax.
A head tax is a set amount paid by working people regardless of income and is deducted from their paychecks. We had one until 1980. It was $100 at that time. However, it doesn't raise much revenue.
Those who tell the Legislature to "just go down there and work on it" seem to be missing the point. When we try to work on a compromise, there is a contingent that says, "no taxes, no way, no compromise."
That leaves little to talk about. When the House majority coalition tries to combine other things on the table with revenue, to form a bigger menu from which to reach a compromise, such as the operating budget or oil taxes, they're met with, "no, we're only here to discuss one issue."
We need compromise and we need revenue.
I was just camping along the Richardson Highway over the week of Fourth of July. The federal Bureau of Land Management's campground was maintained and clean; the Fairbanks North Star Borough campground was maintained and clean; the state campgrounds were not maintained, not clean and looked wild – some even had junk cars on them. Is this the direction we want to go? I hope not.
Many people accept that new revenues will be needed, but some want to wait. I think now is the time.
To continue to cut more services and education, including K-12 and the University of Alaska, and fill the remaining budget gap with draws from savings every year is unacceptable and unwise. We must move our state forward into the 21st century with an educated and well-trained workforce, and of course, a stable economy to attract much-needed investments.
It's been a good run, but now it's time we all chip in a bit.
Rep. Adam Wool, D-Fairbanks, has served in the Alaska House of Representatives since 2015.
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