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Feds suggest using Alaska Permanent Fund to cover bypass mail costs

Postal Service Inspector General issues report targeting bypass mail program

Posted: November 29, 2011 - 1:02am

A federal official is recommending the state tap the Alaska Permanent Fund to pay some of the costs of living in Alaska, rather than looking to the federal treasury.

The suggestion quickly drew a harsh reaction from some state officials, however.

The unusual recommendation came from the U.S. Postal Service’s Office of the Inspector General, which issued a report Monday saying the federal government should not be funding the $70 million bypass mail program, which subsidizes shipping costs to rural locations.

Instead, Inspector General David Williams said the state had the resources to provide for those communities itself, including building new infrastructure to serve them more efficiently.

The program is typically called “bypass mail,” due to its linkage to the Postal Service, but it more typically involves goods delivered on pallets rather than standard mail.

The inspector general highlighted that fact by not even calling it “mail” in his report.

Continuing the bypass mail subsidy for rural Alaska may even be limiting some development in the state, the report said.

“Alaska Bypass removes an incentive for the state of Alaska to develop infrastructure to connect its rural residents,” according to the inspector general.

The report even offered a suggestion as to where Alaska could get the money to pick up that cost itself.

“The State of Alaska’s permanent fund is currently valued at almost $40 billion and could theoretically be used to pay for the program or improve the state’s ground and air infrastructure for the benefit of all Alaskans,” the report said.

The Alaska Permanent Fund, the state’s oil-fueled savings account, was recent valued at more than $40 billion, but recent market declines have reduced its value to $36.7 billion as of last Friday.

The Alaska Constitution protects the fund’s principal, while earnings are used to beef up the fund and pay the Permanent Fund Dividend to Alaskans each year.

The inspector general’s report did not specify a manner in which the fund would be used to follow his suggestions.

In a footnote in the report, the inspector general noted the Alaska Permanent Fund owns the “upscale” Tyson’s Corner Center mall in the Washington, D.C. area.

Sen. Bert Stedman, R-Sitka, co-chairman of the Senate Finance Committee, called the inspector general’s suggestions “over the top.”

Stedman, whose committee monitors Permanent Fund issues, said the federal government shouldn’t be telling the state what to do with its money.

“I thought it was out of line,” he said. “The state of Alaska’s finances are, quite frankly, irrelevant to the fairness of bypass mail,” Stedman said.

In most places, bypass mail is delivered by air to communities off the road system. In one place, the report noted, a road was built to a bypass mail community, but the program continued to subsidize shipping there using tractor-trailers.

The report also noted Alaskans pay no state income or sales taxes, and have the lowest gasoline tax in the nation.

• Contact reporter Pat Forgey at 526-2250 or at patrick.forgey@juneauempire.com.

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