We stand together with Alaskans who support a full Permanent Fund dividend based on the law. For years, we have worked and fought for following the PFD statute, no matter how intense the pushback. We now stand in strong opposition to Ballot Measure 1, which would raise state oil taxes, because the initiative threatens the dividend in the long term.
How does Ballot Measure 1 jeopardize the PFD, and not “save and protect” it, not ensure “larger PFDsm” as the ballot measure promoters claim?
Economics 101: If dollars used as up-front capital to develop fields are sucked up in taxes, the fields will not be developed. If taxes are lower elsewhere, businesses will shift their focus elsewhere.
Based on this knowledge, if Ballot Measure 1 were to pass, how would things unfold in Alaska? Initially, oil revenues collected by the state would increase, but in a mere few years, oil revenues would drastically drop. Therefore, Alaskans, Ballot Measure 1 puts your PFD at tremendous risk.
If we want full PFDs into the future, we must oppose Ballot Measure 1.
Anyone who pays attention knows oil prices have cratered and state revenues have slumped, but they also know we have not reduced government operations spending to live within our means. We have simply slashed dividends to close our budget deficits. The PFD problem has not been our oil tax policy; the PFD problem has been a lack of spending restraint.
Case in point? Most of the proponents for Ballot Measure 1 went along with reducing the PFD with barely a peep the past few years, but hollered loudly and fought against any spending reductions. Most have never been and never will be true defenders of the PFD. They are not interested in collecting more oil revenues for PFDs. What is so incredibly ironic is that their tax initiative not only puts the PFD at risk in a few years, but it also puts at risk the revenues needed for state operational and capital expenses.
The bottom line on the initiative? When you increase a business’ costs in a field by 150%-300% overnight, bad things follow. Sure, you might squeeze a few extra pennies out of the oil industry in the short term, but travel down the road a few years and revenue will drop like a rock when companies pull up stakes and take their dollars to more business-friendly states. Oil production will re-enter a steep decline, and Alaskans will suffer when less oil moving down the pipeline results in less revenue. Based on recent actions, any money the Legislature gets its hands on will go to more government spending, not for PFDs. So, if we pass Ballot Measure 1, we get less investment in the private sector, less oil, less revenue and smaller PFDs.
We have stood firmly in the fight for the PFD not to be subject to the whims of politicians from year to year. We have not abandoned that fight. Our stand in this battle against Ballot Measure 1 is to preserve incoming oil revenue, to prevent a drastic drop in a few years of production and revenues, and is part of our stand for the full PFD. Join us in rejecting Ballot Measure 1 and voting no on it this November.
Sen. Shelley Hughes is a 44-year Alaskan. She served in the Alaska House of Representatives from 2012-2016 and currently serves in the Alaska State Senate.
Sen. Mia Costello, a Republican, represents Jewel Lake, Kincaid, Turnagain, Lake Hood, Sand Lake, Spenard, Dimond and Campbell Lake in the Alaska Legislature.
Rep. Mike Prax, appointed in 2020, represents North Pole in the Alaska House of Representatives.
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