It’s no secret that Alaska pays its bills with oil money. When oil prices dip, as they have in the past few years, it puts us in a financial bind. So unless we start printing our own money, there are only a few options left to us to close the yawning fiscal gap. We can do more budget cuts, dip into the permanent fund, raise taxes, or all of the above. Given these choices the idea of printing our own money is looking pretty good. We could call it “cold cash,” or “tundra tender.”
Taking counterfeiting off the table, we have to look at the alternatives. Lets start with a Republican favorite, budget cuts. The state has been whittling away at the budget since before the 2014 oil crash, so there is little left to cut. We’ve already trimmed way past the fat and are scraping bone marrow. Ask the folks in Cordova how they like the new ferry schedule. Or ask students in the UAF masters program for Chemistry or Physics what they think about budget cuts. And how about the university system eliminating the entire Sociology department? Actually, I can see why Sociology was axed. It involves the study of society and its structures, and these budget butchers certainly don’t want anybody paying attention to that.
Next up would be the permanent fund. The proverbial third rail of Alaska politics. Ex Gov. Bill Walker can tell you all about messing with the permanent fund. Faced with a historic budget gap and a taxaphobic legislature, he did what he could to try and balance the budget. He made cuts to programs and tapped the permanent fund reducing everybody’s PFD by about $1,000. Did I mention that he was EX Governor Bill Walker?
So what we’re left with is taxes, the brussel sprouts of politics. No politician, Republican or Democrat, is anxious to be an advocate for tax increases. That’s why we have propositions like ballot measure 1. It’s a public vote which allows politicians to raise taxes without getting their hands dirty. That’s what I call leadership. Of course one term governor Bill Walker did show leadership and … Did I mention he was a one-term governor?
The above mentioned Proposition 1 is a ballot measure that would tax production at three fields, Alpine, Kuparuk and Prudhoe Bay. These will be the only fields affected. The tax would be 10% for oil at or below $50 per barrel and increase 1% for every $5 over $50 per barrel with a cap at 15%. It would also require that money raised from these taxes be put in the public record. That’s all there is to it. It’s not the end of the world as we know it, and it’s certainly not the end of your PFD. In fact it could be the thing that saves the PFD because, as of now, the permanent fund is the biggest pile of cash on the table.
Lets be clear about something. The oil being pumped out of Alaska is our oil. It is owned by every one of us. It is NOT the property of BP or Conoco Philips. It is a state resource owned by the people of Alaska, and the people of Alaska are hurting. We once had a governor that understood this dynamic. A few years ago that governor signed legislation, the ACES tax plan, that brought in 3.8 billion dollars a year in oil production taxes. It did not result in a loss of jobs. It did not stifle exploration or investment. In fact, since that tax formula was removed with HB 21, we’ve had the three lowest years of investment since Prudhoe came on line. Of course back then Alaska was a different place. Back then there was political room for a wild eyed tax and spend liberal like Sarah Palin. Wait. What?
One and a half term Governor Sarah Palin introduced the ACES (Alaska’s Clear and Equitable Share) tax plan in 2006. She understood that her job was to represent the people of the state, not the boardroom of Exxon. While I didn’t vote for her, I’ll be the first to say she did a good job as Governor, at least where oil revenue was concerned. Of course this was before she was picked as John McCain’s running mate and lost her mind.
So back to Prop 1. It simply introduces a production tax on three long established oil fields to help get us out of a gigantic fiscal hole. It is supported primarily by one local person. By far the largest contributor is the chair of Prop 1, Robin Brena, with $1.09 million. The remaining $280,000 comes from other contributors for a total of $1.37 million.On the other hand the anti Prop 1 folks have a war chest of $18.4 million provided by BP, Conoco Phillips, ExxonMobile and Hill Corp. You know. The people looking out for “your” interests.
With all the negative ads bought by Oil inc. it might seem Prop 1 is an evil liberal scheme hatched by an evil liberal cabal bent on outlawing white picket fences and Coca-Cola. The fact is it’s just a choice. We can continue to eat away at the budget reserve, it’s almost empty, and continue to carve away at the permanent fund. We can continue to cut the budget until the university system is gone, the ferry system is gone and infrastructure disappears into a fiscal pot hole. Or we can take a commonly shared resource and make it work for us. Follow the money folks, and vote.