This column will not be popular with some readers. But it needs to be written.
As readers realize, Alaska is facing a significant financial challenge. Part of that is self-inflicted by not tapping all available revenue sources.
As we have previously discussed on these pages, part of the Permanent Fund earnings stream always has been intended to be used to support government. As former Governor Jay Hammond said when discussing his vision behind the Permanent Fund:
“I wanted to transform oil wells pumping oil for a finite period into money wells pumping money for infinity.” Once the money wells were pumping, “[e]ach year one-half of the account’s earnings would be dispersed among Alaska residents …. The other half of the earnings could be used for essential government services.”
Inexplicably, instead of establishing a mechanism for doing just that, Governor Walker instead has done the one thing Governor Hammond strongly cautioned against — tapping the Permanent Fund Dividend, the portion of the “account’s earnings [otherwise to] be dispersed among Alaska residents.” This year the result is to have left roughly $1 – $1.25 billion in potential new government revenues on the table (50% of FY 2016 statutory net income), while at the same time taking roughly $650 million out of Alaska’s private economy.
The larger part of the problem
But the much larger share of the problem is driven by continued overspending.