Alaska's Permanent Fund won't survive unless state changes course

Alaskans decided long ago to put a priority on using nonrenewable resources to meet the desires of present residents. The needs of future generations have been a distant second, almost an afterthought.

We did this by eliminating the state income tax and never asking for tax increases except for periodic bouts with the oil and gas industry. Paying for everything with nonrenewable revenues worked fine as long as the money flowed fast and furious.

The one constant in our public policy since the trans-Alaska pipeline went into operation in 1977 has been to put a priority on the present. All of us who have lived in Alaska long enough to claim a dividend share the responsibility—Democrats, Republicans, independents and newspaper reporters.

The practice of distributing half of the earnings of the Alaska Permanent Fund to residents each year has been a key part of our here-and-now fixation, a habit that helped slow the growth of the fund. It has meant a great deal to hundreds of thousands of Alaskans who have struggled to get by or send kids to college.

Many Alaskans still don't know the difference between the Permanent Fund and the Permanent Fund Dividend. The dividend program did not, as the late Gov. Jay Hammond always predicted, create a constituency for the Permanent Fund. It created a constituency for the Permanent Fund Dividend.

To paraphrase Mark Twain, the words are nearly the same, but it's the difference between lightning and the lightning bug.

Enjoying the lowest taxes in the United States and receiving annual dividend checks reduced the cost of living in Alaska, increased our dependence on nonrenewable revenues and created the conditions for the reckoning we face today.

The people in political office and those running for office who are claiming that we don't need taxes and we don't need to cut the dividend are telling you what they think you want to hear. Some are magical thinkers. Others are deceptive. Some are unwilling or unable to do more than repeat feel-good bromides that have always worked in the past.

The proof is that they won't reveal how they would permanently cut $1 billion from state spending and keep Alaska running. Reductions of that magnitude could only be achieved at a cost of public outrage and electoral defeat.

They may mention that so-and-so makes too much, but that is the equivalent of arguing over spare change. There is no plan to cut $500 million or $1 billion, just empty talk.

The state has to decide whether the Permanent Fund is going to enter a long and slow period of erosion to finance the refusal of Alaskans to pay taxes. The $65 billion Permanent Fund is not big enough to be all things to all people. It will not survive if Alaskans don't accept more of the burden for financing public services now, though the consequences may not be clear for many years.

Alaska candidates running for state office have to admit that all of the choices mean inflicting pain on the public now or withdrawing more from savings, postponing the pain until young Alaskans are old enough to realize just what we've done to them.

My latest column at www.arctictoday.com contrasts Alaska with Norway, a country that resisted the temptations  that overcame Alaskans and now has $1 trillion saved for the future.