Keep spending sustainable

Here we go again. The Democrats want to boost our dividend checks but only if we adopt a fiscal plan that includes new revenues.

And that, translated for those who need it, means that we would be levying taxes (presumably on corporations) to pay dividend checks. That doesn’t rule out the possibility of individual taxes, either on income or a sales tax, but those seem extremely unlikely right now.

Alaskans have lived in a weird world of their own for many years, thanks to the existence of the Alaska Permanent Fund, established in 1976 after the oil began to flow from the big North Slope discovery at Prudhoe Bay.

The fund is obviously a good thing and was established after our leaders blew through the $900 million proceeds from the 1969 oil lease sale in a scary rush of spending. We learned a lesson from that and established the Alaska Permanent Fund both to make sure nothing like that happened again and to moderate state government spending to something sustainable.

The Permanent Fund system has worked well overall considering that our state leaders are politicians and might otherwise have been tempted to blow every dime they could find. The amazing thing is that the system was developed by people and adopted by the general public, human beings all.

To make sure that public oversight was keen, our community leaders of the time established the dividend system. And that has worked quite well also. Those dividend checks come once a year and are determined after an appropriate amount of state revenue is allocated for community needs. And the system works as intended by focusing public oversight on how much is allocated for our state’s communal needs.

There is always a temptation on the part of many to send the full bill for public spending needs to those who do business here. And in large measure we do just that, but there is an obvious and painful downside to our doing so. Essentially, that is, we raise the cost of doing business to an unacceptable level that drives investors away.

We have learned most of our lessons the hard way. Many of our leading investors warned that establishing and raising taxes on them would be a disincentive to their investments. And that has sometimes proven to be the case.

Alaska did have an individual income tax at one time but repealed it in 1980 after the oil discovery at Prudhoe Bay indicated that corporate taxes would make it unnecessary, at least for a time. Many people hoped that need would never return and so far we have been able to fend it off.

For the time being, at least, corporate income taxes have provided enough money to fill state revenue needs. Only the most dedicated optimist believes that a state individual tax will never be needed again, but for the time being the corporate tax brings in enough revenue for our needs.

We are most fortunate in that regard since oil production generates revenues far in excess of anything our individual incomes could support. That seems likely to continue for years to come.

There is always the risk that our communal spending habits could become unaffordable. Hopefully good sense will prevail, but that is never a sure thing.

Keep your fingers crossed and hang onto your hat.

Tom Brennan is an Anchorage columnist and author of six books. He was a reporter/columnist for The Anchorage Times and an editor and columnist at The Voice of The Times.