I see two problems that are making it harder for Alaska to negotiate a stable long-term fiscal plan. And negotiate we must, where all of the parties — low-income and high-income individuals, oil companies, butchers, bakers and candlestick makers — all contribute.
One problem is what I call the Why-Should-I-Jump-First syndrome. The answer is we all jump together.
The public is not going to believe it when they hear, “Don’t worry, we’ll use Permanent Fund earnings but, trust me, we’ll next dip into oil taxes and income taxes.” I believe any solution must be politically durable, which means everyone needs to look over both shoulders at the same time and see everyone writing checks.
The other problem is the misleading and inflammatory rhetoric that for years has plagued talk of a fiscal plan. I propose a statewide ban on the terms and phrases below. They do nothing to help and merely drive people to their respective corners of the negotiating table with arms folded.
So, let’s ban:
• “It’s a raid on the Permanent Fund” and “Stealing your PFD.” Using the fund’s earnings to pay for public services is not a raid or theft. And turning the discussion into a campaign slogan is irresponsible.
• “Waste,” “corruption,” “bloated” and all the other terms that people throw at public services (and legislators) they don’t like. The discussion should be based on facts, not accusations.
• “Jay Hammond.” I liked our former governor, but he’s not here to defend our collective misuse of his memory.
• “The public wants to see more budget cuts.” Sure they do, until they see it on their highways, at their trooper post, at their school. Waiting for a permission slip from a public that has lived tax-free and dividend-wealthy for two generations could be a long wait.
“Alaskans complain about the evils of government and the ills of public spending, but they miss the purpose of government,” Revenue Commissioner Wilson Condon told Alaskans when he announced the 2002 Permanent Fund dividend. “People for centuries have chosen government as the means to achieve the goals of an organized community, the delivery system for many of the needs of society such as schools, roads, justice and health systems. … Everyone benefits from services delivered by government.”
Condon reminded us that the Alaska Constitution says: “All persons have corresponding obligations to the people and to the state.” I bet few Alaskans ever think about their constitutional obligations to the collective good. It’s time we did.
Condon closed with a warning: “Alaska’s financial picture is changing. … Though some may choose to avoid reality, we are quickly approaching the day when Alaskans will have to help pay for the society we enjoy. And Permanent Fund earnings will be part of that payment plan.”
I believe that part of the plan also should be an increase in the state motor fuel tax, which hasn’t changed in more than half a century. And the plan should include a return to a personal income tax, which helped fund state services for 30 years before oil. And changes to the state’s oil tax and tax credit structure. And smaller dividends. And more budget cuts.
And preservation — not draining — of the Constitutional Budget Reserve Fund so that it can continue its essential role of the past two decades as a stabilizing shock absorber during low oil prices.
That’s pretty much what it’s going to take. Anyone who claims to have a plan without all of the above probably has a bridge or a railroad they want to sell you.
Well-off Alaskans who have prospered from a thriving economy dependent on public services will pay more through an income tax. Less-well-off Alaskans will pay through reduced dividends. The oil industry will be there, too, since everyone needs to contribute.
One last point: The oil industry’s fear of investment in Alaska is not that they are the deep pocket. They know that. What worries them is that they are the only pocket. I believe helping to pay for the services we all enjoy — sharing in that constitutional obligation — would do more to draw investment to the state than any tax credits ever could.
If we all jump together, at the same time, the odds are better we will land upright.
•Larry Persily is a former deputy commissioner at the Alaska Department of Revenue, former federal coordinator for Alaska North Slope natural gas pipeline projects and former longtime Alaska journalist. He currently works for the Kenai Peninsula Borough. The views expressed here are his own.
