Alaska editorial: Use part of fund for communities

Posted: Friday, February 03, 2006

This editorial first appeared in the Anchorage Daily News:

Communities need money and the state has the cash, so it's no surprise that legislators are considering several bills to share some of Alaska's high-price oil wealth directly with Alaska's cities and boroughs to spend on local needs. Supporters call it a community dividend, and we like the idea. ...

The state has a billion-dollar budget surplus. The same high oil prices that have created the state surplus also have boosted municipal costs for heating oil, electricity and motor fuel. The sight of some small communities turning out the lights on local government has attracted lawmakers' attention.

Local governments are closest to Alaskans, more attuned to Alaskans' needs. We're not a state of cookie-cutter communities. Petersburg's priorities are not Kivalina's, and Kivalina's priorities are not Fort Yukon's. ...

Why not just share the current high-oil-price wealth and restore state general fund money for revenue sharing? The problem for communities is that general fund revenue is not a steady, reliable source of income. When oil prices fall and state spending feels the squeeze, revenue sharing is one of the first programs cut. We have a surplus now, but if oil prices fall, we'll soon see red.

The community dividend would do better to draw on a steadier source of income. Fairbanks Sen. Gary Wilken has proposed tapping a complex combination of funding sources: earnings of a decade-old oil royalty settlement deposit in the permanent fund (money that by law can't be used for individual dividends), the Constitutional Budget Reserve and the earnings reserve of the permanent fund.

Let's keep it simpler than that.

Just use permanent fund earnings to pay for the community dividend. The permanent fund is Alaska's most reliable source of continuing income. Communities would be able to count on that money and budget with confidence.

Start with $100 a head, with a minimum of $50,000 per community. The total would be about $70 million a year. Anchorage would receive about $27 million, based on a population of 270,000. That's money we could spend to hire more police, improve street maintenance or trim property taxes.

At about $70 million a year coming out of the fund, what would each of us lose in individual dividends? A few dollars a year. Even over 10 years, the cumulative total would be less than $100 per person. ...

We'd keep our dividends, and at the same time have the means to improve public safety, roads and basic utilities on the local level where people best know what they need.

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