OPINION: Alaska should be the most prosperous place on Earth

Alaska has the resources to be the wealthiest jurisdiction on earth. With an $83 billion sovereign wealth fund and the highest per-capita federal investments in the country, we have the extraordinary privilege of being able to fund state operations and capital programs without citizens paying a dime in state taxes. We possess such wealth that in most years we’ve paid nearly a billion dollars annually in cash payments to residents with America’s largest Universal Basic Income (UBI) program.

The question is, with all this wealth, how do we have such grossly underfunded schools, crumbling basic infrastructure, and de-funded law enforcement that leaves some of the state’s most populous regions nearly without policing?

The answer is simple: Alaska’s second-largest budget line item is Permanent Fund dividend payments.  Last year PFDs cost $883 million, nearly as much as the entire secondary education system, twice as expensive as our university system, and more expensive than Alaska’s largest health insurance program (Medicaid). To put the scale of this expenditure in context, $881 million would be enough to build multiple new dams in the Railbelt, replace dozens of rural communities’ diesel-dependent power with cheaper renewable energy, and develop Cook Inlet gas to fix the pending heating shortage.

Or, if we used our roughly $883 million surplus on a combination of energy and education, we could have class sizes of 15 students or fewer for the entire state and make transformational investments to deliver cheap energy — all without establishing any new taxes.

For the past decade, we have spent nearly $10 billion on dividends while class sizes have grown, local school districts have been forced to shut down schools, and the price of energy has climbed ever-higher as a result of dependence on increasingly expensive natural gas and diesel. Looking back, it is painfully clear that blindly distributing PFDs has a dire opportunity cost — a shattered education system and rising energy costs that threaten to cripple our broader economy.

I think it’s time we step back and look at our largest budget line items with an eye toward efficiency and economic growth.  I don’t know a single educated, productive family who moved to Alaska to get a PFD, but I know far too highly educated families who left as our education system and infrastructure crumble. I don’t know anyone who can pay for their rising heating bill with a PFD, but I know that $10 billion could have rebuilt nearly the entire state’s energy system to provide affordable clean energy for the rest of my daughters’ lives.

For a long time, most political observers assumed the PFD was an inviolate program representing most voters’ highest priority. Not anymore, and I credit Gov. Mike Dunleavy for transforming our politics around the PFD. When the governor laid out budget choices showing that “statutory” PFDs require complete annihilation of public services, voters from every region and across the party spectrum resoundingly chose modest dividends balanced with modest funding for necessary programs like education, transportation and a functioning criminal justice system.

That was the right choice, but the past five years of continued outmigration and massive labor shortages show that we have not yet engaged in the deeper budget transformation necessary for long-term economic growth.

This year, we can afford to reverse about half of recent education cuts, restoring $680 per student to Base Student Allocation funding, pay for necessary federal match for infrastructure programs, and the same $883 million that we spent on last year’s PFD. Yet, compare the numbers: Does it really make sense to restore only half of cut education funding ($175 million annually) while spending $883 million on PFDs that don’t allow a single family to deliver small class sizes, fill teacher vacancies, restore lost career and technical education programs, or build the kind of education system that might actually attract skilled workers from other states?

Does it make sense to fail in capturing federal infrastructure matching dollars for energy, when we should do that and be comprehensively developing our energy resources to avoid dependence on ultra-expensive foreign LNG?

No, it doesn’t make any sense to accept mediocrity and economic stagnation.

With our sovereign wealth fund, small population, and mind-boggling supply of world class energy resources, we should be investing in ourselves with the goal of becoming the wealthiest jurisdiction on earth. Rather than “competing” with Mississippi or Alabama to be 49th in [pick your dismal statistic], we should be competing with Norway and Iceland for longest life spans, highest educational attainment, highest labor force participation rate, and highest worker productivity.  All we have to do is spend less on cash handouts and, instead, use that immense wealth to finally meet Alaska’s promise.

Zack Fields is in his third term representing Downtown, South Addition, North Star, Fairview, and Eastridge neighborhoods in the Alaska House of Representatives.

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