Sometimes shortcuts don’t work. You run into road construction, traffic is backed up or you get lost. The leadership in the Senate Majority Caucus has found a shortcut, but it’s dangerous and has the potential to jeopardize our state’s future.
Since the start of the session, the 13 members of the Alaska Independent Democratic Coalition have been trying to engage the leadership in the House and Senate to find a path forward that will fix Alaska’s $4 billion budget gap and protect our economy.
I and other members swallowed a little pride on Friday by voting for the compromise version of House Bill 247 to roll back many of Alaska’s unsustainable oil tax credits. We thought the fiscal savings should have been greater, but we compromised. Many in the House Majority also had concerns with the bill, but they also compromised.
Time is running out for the Senate Majority to join us in the spirit of compromise and pass the bipartisan legislation that was approved last week by the Alaska House of Representatives. The bill, originally put forward by Gov. Bill Walker, will fix some obvious flaws with how the state of Alaska supports the oil industry and ensure that our oil resource is not just given away for nothing.
Fixing oil industry subsidies is just one part of the bigger responsibility on the shoulders of every member of the Alaska House and Senate. We must work together to come up with a responsible budget for next year that is fully funded. Unlike the federal government, we can’t run on debt.
As the Alaska Legislature is approaching the constitutional deadline to finish up work for the session, the members of the Senate Finance Committee and the leadership in the Senate Majority Caucus are threatening Alaskans with a dangerous shortcut to get around working with the Minority and Walker.
Rather than buckling down, getting to work and working together, they are saying they will fund most of Alaska’s budget gap by taking what they want from the Permanent Fund Earnings Reserve with a simple majority vote. Such a shortcut is a one-time raid on the Permanent Fund and will jeopardize future Permanent Fund Dividends. It also falls well short of the needed comprehensive plan to address our growing fiscal crisis. This shortcut also runs counter to the advice of the national credit rating agencies, who have stressed the need for Alaska to get its fiscal house in order or risk further downgrades to our credit rating.
The Permanent Fund Earnings Reserve totals over $7 billion. It’s the account where the money made from the $52.6 billion Permanent Fund is kept. Your yearly dividend is funded by that account. Using billions of dollars from the Permanent Fund earnings to fill the budget gap while sending hundreds of millions of dollars to oil companies that don’t need them is a shortcut that Alaska can’t afford to take. It will endanger future Permanent Fund Dividends by using up valuable savings that we need to preserve. This misuse of funds makes it difficult to weather the fiscal crisis brought on by the sudden drop in oil prices and the broken promises of increased oil production.
Our coalition does not agree with an irresponsible budget, the possible continuation of unsustainable oil tax subsidies and policies that will drive us into a recession. We are adamantly opposed to raiding the Permanent Fund and will not support this dangerous shortcut. The Republican-led Senate and House Majority Caucuses have the votes to take the shortcut. However, such an action would skip the mandate from the Alaska people for lawmakers to work together collectively with Walker to solve our problems. We need to put our state on a pathway towards prosperity.
Our economy is on the verge of a recession, and we are paying out more in subsidies to the oil industry than we make from production taxes. Meanwhile, our institutions are withering away because they are constantly asked to do more with less. If there is ever a year to take the time to get it right, this is it. Now is not the time to gamble on a shortcut and risk getting lost.
• Rep. Harriet Drummond, D-Anchorage.
