Brennan: Alaska’s future is at stake

By Tom Brennan

Alaska has painted itself into a corner on the Permanent Fund dividend issue and getting out will be difficult.

The basic problem is the approved formula for determining the size of the dividend checks. If followed, the individual checks this year would be something north of $3,200.

And to further complicate things, Gov. Mike Dunleavy argues that the state should pay the full dividend and include making up the difference on the checks that were shorted over the last few years, bringing this year’s payments to something like $6,000 per person.

Dunleavy says the money is owed and the formula should be followed until the law is changed.

That case can be made and seems fair, except for the fact that it would require either a huge dip into the Earnings Reserve Account of the Alaska Permanent Fund, or major cuts to the already-lean state budget and/or new taxes.

The only one of those three options most of us could live with is a dividend check of a size that does not follow the 1982 formula but could be written without endangering critical Permanent Fund accounts. And that would be a dividend something like the $1,600 we got last year.

We are headed for new taxes someday. Getting rid of the state’s personal income tax entirely as we did in 1980 was a welcome idea at the time, but it was obvious from the beginning that the tax — or something like it — would return eventually.

Our state leaders can and undoubtedly will fight against it for some years yet, but the state’s responsibilities to its citizens will require funds that are not otherwise readily available without jeopardizing important job and investment sources that we can’t live without.

Some think the bill should be paid by the state’s oil producers by raising their taxes. After all, the argument goes, the companies are making billions on our oil. The problem is that the companies are already paying billions in state taxes and raising their cost of doing business here would be a major deterrent to new investment, which we very much need.

And with our working population shrinking because so many jobs are already moving south, the last thing we should be doing is raising taxes on the companies that are paying them now. That could cost us our futures.

I worked for ARCO for 11 years and, when I had a public relations firm for 20 years, all of the major companies operating here were my clients. That included BP, ConocoPhillips, Exxon and Shell. I have no connection to any of them these days but the experience gave me a good understanding of how their leaders think.

And that convinced me that we would be shooting ourselves in the foot by raising taxes on the companies that continue to operate here.

By all means, let’s not do that.

The Legislature and Dunleavy have some tough decisions to make. And we have a lot at stake in how those issues are resolved.

All I can suggest is that we pay close attention to how our current crop of leaders decide such things. The stakes couldn’t be much higher.