If you’ve been unfortunate enough to survive a car accident, you know the feeling.
Once your hands have stopped shaking and you stop to remember it, your mind settles on one particular moment. It’s the moment where, if you had done something just a little bit differently, you wouldn’t have crashed. If you hadn’t turned left. If you had just jerked the wheel. If you had just looked up from your phone.
Alaska hasn’t crashed. Not yet.
Instead, the 49th state has one last chance to jerk the wheel and avert a looming collision that will crash your Permanent Fund Dividend and benefit oil companies.
Right now, the Alaska Legislature is driving to tap the earnings of the Permanent Fund to pay for state operations. This is a necessary move. The collapse in oil prices has created a $4.1 billion annual deficit. The deficit is so large that even the state’s capacious savings accounts, filled during the oil boom, will be exhausted within four years.
Permanent Fund earnings will not be enough to fill the deficit, however. The various plans moving toward completion in the Alaska Legislature will raise only $2 billion to $3 billion per year, and they will most likely cap your dividend at $1,000. Without the cap, you are expected to get a dividend of nearly $2,000 this year.
To make ends meet, we need taxes and cuts. While the Legislature is expected to cut state operations — things like schools, public services and police — by some $500 million this year, it has not yet cut the state’s third-biggest expense: the subsidy it gives oil and gas companies drilling in Alaska.
Next year, according to state estimates, Alaska will subsidize oil and gas drilling with $825 million in tax credits. That’s more money than the state is expected to spend on its court system, Troopers, parks, environmental protection, Fish and Game, and prisons — combined.
It’s very nearly the same amount of money the state is expected to earn from oil and gas next year. In fact, if you take away the constitutionally required oil and gas payment to the Permanent Fund, it will be less.
Oil prices are to blame for much of this. The state’s generous oil and gas subsidies made sense when Alaska was earning billions in oil revenue. Thanks to low prices, oil and gas revenue now earns just about as much as every other tax the state levies — and that isn’t much.
Unless the Alaska Legislature turns the wheel and reduces those subsidies, you will be sacrificing a portion of your Permanent Fund Dividend to benefit oil producers. There’s simply not enough money to pay the subsidies otherwise.
Members of the House Resources Committee have argued that credits are necessary to ensure future production. Their plan, House Bill 247, is now in the House Finance Committee, of which Rep. Cathy Muñoz, R-Juneau, is a member. If you have strong feelings on this bill, contact her.
We don’t buy that argument. Market forces, and market prices, have always and will always steer the pace of drilling in Alaska. Oil and gas credits, even hundreds of millions of dollars in them, are small potatoes next to the trillion-dollar global oil market.
If the House Finance Committee and other lawmakers fail to modify HB 247, and if the Legislature fails to address the looming crash, we will know exactly who was behind the wheel.
