My Turn: Don’t wait for Alaska to crash

  • By FRAN ULMER
  • Sunday, November 15, 2015 1:02am
  • Opinion

“The dogmas of the quiet past, are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise — with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country.”

President Abraham Lincoln’s words apply to the situation we are in right now in Alaska. Forget the platitudes of “cut the budget first,” “hands off my PFD,” “something will come along to save us again,” “the oil companies make too much profit in Alaska,” “maybe we could have a lottery,” or any of the other simplistic and inadequate phrases we use to avoid reality. None of them will solve the problems we face.

The simple fact is that we have had a free ride in Alaska since 1980, when we abolished our statewide income tax, and went on the oil revenue train for 90 percent of our operating and capital spending.

It’s over.

It’s time to act as soon as possible to avoid an economic collapse that will unwind the fabulous state that many generations have built and that we all love and want to prosper.

When Alaskans voted to adopt the constitutional amendment that created the Alaska Permanent Fund in 1976, it was sold to voters with a simple goal: Prudhoe Bay will not last forever. Someday the oil revenues will run out and when that happens, it would be great to have saved enough to help pay for education, transportation, public safety and all the other things that define a civilized society. I know this because I worked for former Gov. Jay Hammond as his legislative assistant, and was part of his team going to meetings around the state discussing the amendment with voters.

The Permanent Fund Dividend was not part of the package. This may come as a surprise to people who weren’t here then, but the dividend came several years later as a way of sharing some of the revenues from Permanent Fund investments.

Gov. Hammond, who pushed very hard for both the creation of the Fund in 1976 and the dividend in 1980, saw it as a way of both equalizing some of the state’s resource wealth and protecting the Fund itself (so people wouldn’t raid the Fund for big capital projects or other subsidies). That’s worked really well. Maybe too well, because now people think that the Fund was created so they can get a check every year, even if the economy of Alaska tanks, people lose jobs, schools close, business owners go bankrupt and families lose equity in their homes.

Alaska might have two or three years of savings left, in addition to the Permanent Fund itself (assuming that the price of oil stays the same and significant budget cuts are made every year). Then we hit the wall.

Alternatively, we can use those savings combined with earnings from the Permanent Fund as an endowment to adjust to a sustainable level of spending and new revenues as a “safe landing “ to cushion the economy. If we don’t do this, there won’t be a dividend in a few years, anyway. So reducing the dividend to the level it was a few years ago (2012-13), and using a portion of Permanent Fund earnings to fill the gap, is a tradeoff worth making to keep Alaska from that wall.

Gov. Bill Walker has proposed one way to do this and so did Sen. Lesil McGuire. Others may suggest different approaches and that’s fine, as long as the Legislature passes one of these safe landing solutions in 2016.

Waiting for the crash is unacceptable and unconscionable, and damaging to our economy, communities and Alaska’s future.

Both Republicans and Democrats alike must channel Abraham Lincoln and find the courage to act before it is too late.

• Fran Ulmer is a former mayor, legislator, Alaska lieutenant governor, UAA chancellor, director of ISER and staff member to Gov. Jay Hammond.

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