Alaska editorial: State's cash payout shouldn't be repeated

Posted: Sunday, August 17, 2008

The Legislature's decision to offer a cash payout to every Alaskan is understandable in the context of incredible prices for the energy we all use to work, travel, stay warm and live through the long winter.

The energy package approved last week, though, needs some serious reconsideration when the Legislature returns to Juneau in January. The state isn't likely to have the money to maintain this kind of spending in the long-term.

With the simple cash payout, the Legislature runs a high risk of creating an ongoing expectation of entitlement. If energy prices are no lower next year, there will be no logical basis from which legislators can say "no" to demands for another "resource rebate."

The "resource rebate" label itself is spin. Alaskans already have a resource rebate - it's called the dividend and it already provides a substantial amount of money that can be spent on energy. The dividend also will be rising rapidly in response to high oil prices.

Taken from a five-year average of earnings of the Alaska Permanent Fund, the dividend is at least grounded in something sustainable. The state's general fund, from which the $1,200 individual bonuses will be drawn, just a few years ago was inadequate to support state government.

With continued decline in the state's oil production, that scenario could return even at relatively high oil price levels. Legislators could find themselves having to chose between a continued "resource rebate" and the collective needs of Alaskans for schools, public safety services, resource management and roads. In previous debates, services have lost out to continued individual payments through the dividend.

If the Legislature was determined to do "something," a limited subsidy of heating oil, phased out over a few years, would have cost less, would have better sustained conservation pressures and would have better targeted the problem.

To be fair, parts of the Legislature's energy package do focus narrowly on energy issues - it increases the allowable subsidy to rural electric utilities and allows villages to borrow more for bulk fuel purchases.

But the cash payout to individuals creates serious issues and inequities. Nothing requires the money be spent on energy costs. Most of the money under the approved plan will land in Anchorage, where heating costs have risen only moderately. Many people in lower income brackets don't even apply for the dividend because the entire check is automatically garnisheed for debts, so they won't see the money. Neither will new arrivals in the state.

The clearest target struck by the $1,200 checks is the state's treasury. The Legislature must make sure the shot doesn't leave a festering wound.

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