My dad was among those who worked hard for statehood. The folks who brought us statehood recognized that Alaska did not have a sufficient population to support itself through taxation. It needed to develop its resources. That remains true today.
Yet, notwithstanding Alaska’s vast mineral wealth, we have only five large mines operating in the state. Notwithstanding having the largest national forest in the United States, we have a very small timber industry.
Gov. Mike Dunleavy recognizes the need for more mining in Alaska as seen by his support for a road to open the Ambler Mining District and for the Mental Health Trust to assist with opening the Palmer Project in Haines. The governor recognizes the need for more timber development as seen by his support for exempting the national forests in Alaska from the Clinton-era “Roadless Rule.”
The governor also wants more oil development. Recent discoveries by ConocoPhillips and others have shown that the oil is there. But Alaska’s constantly changing oil tax law is a significant barrier for companies otherwise wanting to invest and develop new fields in Alaska. By my count, the Legislature has changed oil taxes eight or nine times since statehood.
The problem is nonpartisan. I have had the pleasure of serving five governors. But in that time, I saw the budget continue to grow and grow. We have been deficit-spending since 2014. What does that mean? In recent years, state government has been spending billions more than we received in revenue. To make up the difference, we have used more than $14 billion in savings to cover the difference.
As long as Alaska has an unbalanced budget and is funding the operating budget with savings, potential resource developers wanting to invest in Alaska will rightly be concerned that tax laws will again be changed to require them to make up the shortfalls in that budget.
Right now, we have an enormous task in front of us: an annual budget deficit of more than $1 billion. That’s why Gov. Dunleavy is attempting to “right-size” the state’s operating budget. He recognizes that a balanced budget will provide the stable economy that will attract investment. He understands the importance of a stable investment climate to boards of directors when deciding where to put their companies’ money.
We may not agree with every cut he has proposed or the fact that he is trying to fix the problem in one budget, but he has adopted the right policy. To attract new investment to develop our resources, we need to show investors that we are serious about balancing the budget. Gov. Dunleavy has done that.
Carl Brady is a retired insurance executive in Anchorage. He currently serves on the Board of Trustees of Alaska Pacific University and the Alaska Permanent Fund Corp., and is a community advisory board member for Wells Fargo Bank Alaska and the Alaskan Command Civilian Advisory Board. In previous years, he was the Honorary Consul of Belgium and served as a National Trustee of Boys and Girls Clubs of America.
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