State already has fiscal plan

A Spectrum, by Jim Crawford

With this incredible barrage of the Anchorage Daily News and the Democrats, Alaskans could believe that our state is threatened by fiscal meltdown. Balderdash.

Last year, oil flow stabilized through the Alyeska pipeline. Therefore, cash flow stabilized to the state treasury. Production for the next decade is projected to remain constant at one-million-plus barrels per day. "No decline in 1999" became a reality. Tourism, retail, housing, air freight, all add to our growing economy, but the state's cash flow comes from oil and gas. Let's not disrupt our economic diversification by adopting taxes that take money and jobs out of the private sector to support more government.

New fields on the North Slope, finds on the Kenai, plus prospects of production from ANWR and NPRA brighten our fiscal future. But, prevailing wisdom of the doom and gloom crowd hasn't changed. The excuse, "As Prudhoe Bay declines so declines the state" is simply no longer true. We can expect an additional $300 million per year when the natural gas line begins producing.

Alaska ran a budget surplus last fiscal year. In five of the last 10 years, we've run a surplus. The Constitutional Budget Reserve (CBR) grew last year, in contrast to the prediction of its demise. Oil income to the state will be level for the next decade subject to the ups and downs of price. That price volatility is why voters passed the CBR, to be the shock absorber. We put money in the CBR when the oil spikes. We use money from the CBR when the price of oil declines. That is a fiscal plan.

For a reality check, look at the Alaska Comprehensive Annual Financial Report, (CAFR) for FY 2001. Download it at www.state.ak.us. The CBR net of the General Fund obligations was $3 billion. The PF Earnings Reserve -- totally separate from the principal -- was $2.4 billion. That's $5.4 billion in uncommitted cash.

According to the CAFR report: "Over time, the Legislature has established more than 50 cash pools either as sub funds of the general fund or other separate pools." Alaska Industrial Development and Export Authority has net cash and investments of $878 million and Alaska Housing Finance $1.8 billion over and above their obligations. That's another $2.6 billion. Could they spare a billion or so for the CBR? What's in the other 48 accounts?

We're stampeded to support an income tax, sales tax, booze tax, hotel tax, and told to threaten our legislators with retirement if they don't enact them. Virtually any tax is OK as long as it enshrines the operating budget with increases. Do we have a fiscal plan? Plainly, yes. But the liberals demand that we recognize their perception of a fiscal crisis and solve it with our tax. The "I've got mine" crowd pontificates that it's our responsibility as good citizens to pay more than we already do in taxes. Again, balderdash.

We do have exciting economic challenges in Alaska. We're close to surviving eight years of slow growth fostered by an economically misdirected administration. Our new governor can refocus the state's efforts -- to create jobs instead of kill them. Look at the economic incompetence in management of our huge state-owned forests. Look at the anti-Alaskan investment policies of the state pension funds. Every other state's retirement funds invest in their own state. Under the Knowles-Ulmer regime, Alaska's fund managers redline Alaskan investments.

Fortunately, our eight-year period of economic frustration ends with the passing of this administration. As a parting shot, Knowles and Ulmer, backed by the heavy guns of the Anchorage Daily News, are again demanding their divine right to pick your pocket. What a hustle! With $5.4 billion in cash reserves and billions more in "sub funds accounts" and finally stable cash flow from oil, it's obvious the fiscal plan that Republicans enacted is working. Let's just say no to this latest tax hustle.

We have stable cash flow. Let's increase it through production. Frankly, we need a governor who can read a financial statement and won't be hustling us for increased taxes. Frankly we need a governor who will not strip the economy of thousands of jobs by imposing new taxes. Wouldn't it be great to have a frank governor leading us in the ways to meet our fiscal challenges? Legislators should stay their course and help elect such a candidate this fall. Alaskan taxpayers will reward their political courage.

Jim Crawford