Economic development plan should include finance plan

Posted: Monday, August 08, 2005

A laskans have talked for years about a financing plan for Alaska. What's needed is an economic development plan that includes a finance plan.

Alaska had a Department of Economic Development early in statehood, once headed by a familiar name, Frank Murkowski.

Oil revenue in the late 1970s and early 1980s financed an increase in state government and in handouts to Alaskans. Coupled with increased environmental activism, the push for economic development faded. DED was rolled into other departments.

Alaska Permanent Fund trustees recently indirectly pointed the way to a finance plan and economic development when they announced 10.2 percent earnings for the $31 billion fund.

The trustees suggest that instead of paying dividends based on the 5-year average cash earnings, that withdrawals for dividends and other state services be based on the 5-year average of the market value of the fund.

Chief Executive Michael Burns said that 10.2 percent earnings for the past year won't translate to higher dividends. Most of the 2005 growth was unrealized - gains on paper only. Unrealized gains don't count in calculating dividends. They would count if the annual withdrawal from the fund was based on the market value of the fund.

If that plan, which requires a constitutional amendment, was in effect this year, the amount for dividends would be higher and the Legislature would have $500 million for state purposes other than dividends. And it's needed. Small communities throughout Alaska are discontinuing government services from lack of revenue sharing and because of the high cost of oil for transportation, to heat homes and to generate electricity.

Lawmakers could help strapped communities by reinstating revenue sharing. And a portion of it can be dedicated to two things that will lower the cost of living to all communities: better access - be it roads, ferries or airports - and promoting construction of more hydroelectric power feeding a power grid linking communities. Access and power also are needed to develop resources - economic development.

Road access into Southeast with the road from Juneau to Skagway and the Bradfield Road linking Ketchikan, Wrangell and Petersburg to British Columbia's Highway 37 are needed to cut the cost of travel in and out of those towns, especially with the soaring cost of diesel used by ferries.

Ferry travel is getting more expensive under the current system. If a guy and his wife want to take their three kids and car from Juneau to Haines, the price five years ago was $190. Today it is $240 - 10 percent higher if they travel on a high-speed ferry.

Ketchikan Daily News By Lew Williams

Those opposing the roads are missing another point. The capital of Alaska may always be in Juneau but the day might come when the Legislature, for convenience of the majority, decides to meet in Anchorage. There won't be much Southeast can do about it.

In the first state Legislature in 1959, when the ferry system was authorized, 23 percent of the lawmakers were from Southeast and only 20 percent from Anchorage and Mat-Su. Currently 50 percent of the lawmakers are from Anchorage and Mat-Su and only 7.5 percent from Southeast. The southcentral part of the state expanded because of roads.

Aside from getting communities off of diesel power, Southeast needs the cheap power for its mining industry. Lines from Snettisham hydro are being extended to Kennecott's Greens Creek Mine on Admiralty Island south of Juneau. That mine uses as much power as Petersburg and Wrangell combined and currently burns five million gallons of diesel a year to generate it.

Alaska has the assets - add power and water to timber, minerals, seafood and oil - to start on an economic development program for the entire state, which will include a finance plan. It also has the incentive - $50 a barrel oil and permanent fund earning exceeding 10 percent.

Lawmakers, especially those advocating more revenue from the oil industry, need a plan of what to do with Alaska's current assets, and what to do with higher oil taxes aside from making them a political talking point.

• Lew M. Williams Jr. is former publisher of the Ketchikan Daily News.



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