Alaskans search for fiscal stability. In Alaska, there are essentially two major fiscal sources of revenue that come from oil: royalty and production revenue. These sources provide revenue to fund the basic operation of state government through the operating and capital budgets. Alaska Permanent Fund dividend payments are part of the operating budget.
Alaska has a fiscal problem that since 2015 has caused many bad things to happen in our home state.
Alaskans feel and know that we are in a deep recession. Alaska has seen continuing job losses for five years, 2015-2019. The Washington Post reported pre-COVID-19 that Alaska, with the “nation’s highest unemployment rate,” suffers “since 2015, the fastest rate of job losses.”
Since 2015, the front pages of newspapers across this state write about massive budget cuts — over $125 million to the University of Alaska; the near elimination of the ferry system; the almost total destruction of Alaska’s capital budget (except for mandatory matching federal highway monies), resulting in losses of thousands of construction jobs; the increasing threat of losses of hundreds of millions of dollars per year to K-12 education funding; the chopping of arts programs; and meat cleaver budget slashing of funding for our senior citizens and elders. Compounding that is the draining of $15 billion from our Constitutional Budget Reserve and Statutory Budget Reserve funds. This list can go on and on and grows.
Losses by Alaska’s families are especially grievous. One of the biggest losses directly suffered by each Alaska family is the massive reductions in funding for PFDs. Loss of production revenue under Senate Bill 21 leads to these massive reductions to your PFD annual payments.
The average Alaska family of four — mom, dad and two children — has lost over $28,000 since 2016 because of Alaska’s fiscal problem. The PFD payment loss to each person is over $7,000: $1,061 in 2016, $1,289 in 2017, $1,328 in 2018, $1,304 in 2019 and about $2,170 in 2020, after we receive today’s early distribution, for a total of approximately $7,152 per person. That amount times four means the family has lost over $28,000.
A fact is that when Alaska has insufficient money for an operating budget, the PFD can be and is (too easily) reduced.
What is the reason for Alaska’s fiscal problem? SB21!
Want to know how to cause Alaska to go into a fiscal crisis and blow through $15 billion in savings and create the need to invade the permanent fund? Reduce revenue by billions and billions. SB21 did this to Alaska. SB21 caused Alaska to lose billions and billions of dollars in revenue.
Where has your PFD or the university’s funding or ferry funding gone? To the oil companies.
SB21 was a transfer of state wealth to the oil companies from each and every Alaskan. Losses from your account filled the oil companies accounts.
Whether you are a single person or a family of four, we can agree something needs to be done to provide fiscal stability to Alaska. There is a real solution for Alaska’s fiscal crisis. It is called the Fair Share Act, a constitutional citizen’s initiative that is on the ballot in November of this year.
The Fair Share Act does several good things. It eliminates the $8 per barrel credit. It limits cost deductions to only those costs actually related to the production of oil from the field being taxed. It provides transparency so Alaskans are not in the dark about producers’ real costs and revenues.
States such as Texas are far more prudent in handling their oil ownership rights and taxing authority than Alaska. Texas receives for its barrels of oil about 30% of market price through a combination of royalty and production revenue. If Alaska looked after its citizens just like Texas, Alaska’s yearly revenue from oil would approximately double. And Alaska’s production revenue, if we were just like Texas, would not have been a net negative during 2015-2019 if the Fair Share Act applied to the sale of Alaska oil.
Remember the “Alaska citizens” Fair Share Act only applies to Alaska’s legacy fields: Prudhoe Bay, Kuparuk and Alpine.
Under the Fair Share Act, revenue to Alaska from Alaska’s Prudhoe Bay would improve by about $1 billion per year at an oil price range of $55 to $65 per barrel. Prudhoe Bay is one of the most profitable oil basins in the world. If Alaska gets Prudhoe Bay right, we get Alaska right.
Alaska’s Fair Share is a solution each Alaskan who receives a PFD might want to investigate between now and election day 2020. https://alaskasfairshare.com.
Any voting Alaskan who receives a PFD and/or one for their dependents should consider voting Yes on 1. Vote Yes for Alaska’s Fair Share.
Joe Paskvan is retired after almost 40 years as an attorney in private practice. He is a former state senator who served as chairman of the Senate Resources Committee. He lives in Fairbanks.