It's All About The Budget

Contributed by DeLena Johnson

It’s all about the budget. This is not news. Most people are campaigning, complaining, cussing and discussing on or about something to do with PFD and state income. That is those who are not so fed up so that they have quit talking about government and politics. No, this is not news.  What has been lacking from the discussion is that we, as Alaskans, have a variety of options to deal with the problem.  

The government’s predictable and immediate response to the oil revenue decrease was how to use savings to fund our deficit. What an easy way to solve a problem, and historically it worked. No matter what the source of an economic downturn, Alaska has had the luxury of going to some big pot of money to solve the economic crisis of the moment. We are just about out of pots of money, so now we are eyeing the permanent fund.

It is a big mistake to use our savings to cover our sloppy spending habits. Jay Hammond stated his vision this way, “I wanted to transform oil wells pumping oil for a finite period, into money wells pumping money for infinity. Each year one half of the accounts earnings would be dispersed among Alaska residents, the other half could be used for essential government services.” 

This makes sense if we had been prudent about government expansion. Unfortunately we have not, but we can be. As Nobel Laureate and former Rasmuson Chair in Economics, Dr. Vernon Smith stated, “Alaska has important assets besides the declining value of its developed crude resources at Prudhoe, etc. As an alternative to the State taking from the citizens fund account, they could auction title (or long term lease rights) to these assets: railroad, airport, and ferry. If Alaska operating assets are sold and some of the State land sold, they would be unlocked and available for generating new income. Consolidating agencies with billions in assets might be another revenue source.”  With that advice in mind, let government do what it does best take care of essential services, divest itself of the rest, privatize what it can and allow the rest of the public resources to be developed for the good of our residents.  

Alaska is a resource rich state, we have many assets besides oil. We are rich in gas, gold, coal and a long list of precious metals. Alaska is rich in unparalleled beauty, mountains, animals and fish. These are all components that make our state the premier destination for adventure tourism.  Alaska has one more resource: A skilled workforce when it comes to dealing with our rich assets. The last years of development have created a group of skilled operators that are ready and willing to get to work and make things happen.  

What should we do with those revenues from the sale of other resources? Again Vernon Smith states, “These are your assets as Alaska’s people. Deposit them to your people’s account, the permanent fund. This fund is your jewel, add to it and guard it.” Government has a way of spending all the money it has available. We must guard against our own governments extravagance, or in the words of Jay Hammond, “You have got to remove the money, put it behind a rope so it cannot be used for flamboyant expenditures.”

Alaskans, we will find our way out of this fiscal crisis. We are the richest state in the nation. We have companies here and people skilled enough to take control of our own destiny and find a way to extract and market our vast resources. Let the people get to work, privatize the parts of state government that make sense, and make sure the State allows access to the public lands for tourism, personal use subsistence use and natural resources. We must add to our savings, not keep digging into it. 

A sustainable budget is key to keeping Alaskans working, economically stable. It’s time to stop the grandstanding, hand wringing and political maneuvering. There is hope for our great state and our future. We can and will weather this storm, but common sense, governance and sound economic policy is key.

My thanks to Juanita Cassellius for the quotes from Dr. Vernon Smith.