Alaska editorial: We should take seriously the promise of a loss in federal dollars

Posted: Monday, April 30, 2007

This editorial appeared in the Anchorage Daily News:

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The state's congressional delegation has told Alaskans we'll have to be more self-reliant.

We've heard this before. Sen. Ted Stevens and Rep. Don Young and, more recently, Sen. Lisa Murkowski have shared with us their read from Washington, D.C., that says federal spending is going to decrease in the north.

We react with sober concern. Then we ask how much we're going to get from the feds this year.

And we get a lot - $705 million in special projects in 2005. We don't have a count on how much money Sen. Stevens has steered north in his 39-year career, but he wasn't named Alaskan of the Century for his loud Hulk ties or even louder oratory. He's been the principal driver of federal spending in Alaska and, as UAA economist Scott Goldsmith points out, one in three jobs here can be traced to federal spending.

So what happens when there's less from Uncle Sam?

All three members of the delegation suggest that Alaska may have to do what Alaska state lawmakers have long feared to do - use Permanent Fund earnings. At some point, Alaskans will have to make the hard choices we've been spared for a generation.

For years, the warnings have been based on the volatility of oil prices and the certainty of declining oil production. Now, we're told, opposition to pork-barrel spending and Alaska's "Bridges to Nowhere" poster-pig status on the national scene mean we're going to get less from D.C.

Are we ready? No.

Nobel Prize winning economist Vernon Smith once commented during a visit to Alaska that in one sense, Sen. Stevens hasn't done us any favors. His point wasn't so much a criticism of the senator as a recognition of our particular reality - with oil revenues and massive federal spending, Alaskans could afford a featherweight tax burden and a yearly dividend check. That made us soft.

Without the discipline of necessity, we didn't look harder for economic opportunity, didn't invest in research and education as we should have, blunted rather than sharpened our entrepreneurship and innovation. We didn't think or even look outside the box, because we were too doggone comfortable within it.

Neither Mr. Smith nor many Alaskans would have advised turning down that money, which did good in every part of the state. Many decry the federal government, but our economy would collapse without it.

Our congressional delegation points to the Permanent Fund because it's ready money; Alaska could use earnings without reinstating the income tax, last levied in 1979, or imposing a statewide sales tax. The delegation also could make a stronger argument in Congress if Alaska were investing some of its own wealth in its own needs.

It's Alaska's job to decide how to deal with the new reality. Chances are that eventually, one way or another, we'll have to dig deeper into our own pockets. The sooner we decide how, the better prepared we'll be when the day comes.

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