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up front Saturday 10 auguSt 2019

Alaska budget woes prod debate over oil-wealth fund checks

Continued from Front age of fund income over want to debate oil taxes
five years. But last year, and whether companies
Prices topping $100 a bar- after going through billions are paying enough, Dun-
rel in 2014 went into a free- of dollars in savings and at leavy has focused on cut-
fall that worsened a bud- odds over taxes and fur- ting a budget he considers
get deficit now in its eighth ther budget cuts, lawmak- unsustainable.
year. State revenue officials ers began using earnings to There would not be an
believe prices in the $60 a help pay for government “honest discussion” about
barrel range to be realistic and sought to restrict what spending if tax bills also
long-term. could be withdrawn for div- were being introduced,
This year, an average of idends and government. said Dunleavy’s reve-
about 508,000 barrels of oil Alaska has no state sales or nue commissioner, Bruce
a day has coursed through personal income taxes. Tangeman.
the 800-mile (1,288-kilome- Dunleavy, a Republican, Dunleavy vetoed more
ter) trans-Alaska pipeline, says a longstanding divi- than $400 million, riling crit-
according to the pipeline dend calculation that ics who say it’s too much,
operator. hasn’t been followed for too fast and prompting
On the pipeline’s peak day three years should be fol- public outrage that is fuel- This undated file photo shows the Trans-Alaska pipeline and
in 1988, 20 years after oil lowed until it’s changed. ing a recall attempt. pump station north of Fairbanks, Alaska.
was discovered at Prud- That would mean checks The Board of Regents, fac- Associated Press
hoe Bay, 2.1 million barrels of about $3,000 this year. ing a potential 40% cut in Lawmakers, unable to has the option of cutting
flowed. His support on the issue state support for the univer- reach the higher threshold again.
“Alaska needs to think includes conservative Re- sity system, has taken initial required to override Dun- Larry Persily, a former dep-
about the new world we publicans and some Dem- steps toward consolidating leavy’s vetoes, passed leg- uty revenue commission-
have today,” said Cliff ocrats, though other con- its three accredited cam- islation seeking to reverse er, said the choices are
Groh, a longtime politi- servative Republicans and puses into one. many of the cuts. Dunleavy painful.q
cal observer, adding later: Democrats have resisted.
“The cavalry” of high prices He has indicated willing-
and booming production ness to discuss formula
“does not seem to be com- changes but insisted on a
ing.” public vote. He said Alas-
Oil has been the eco- kans didn’t mind the size of
nomic lifeblood of Alaska, their checks until politicians
whose population of about began tinkering.
735,000 is less than Seattle’s. Checks in recent years
A 1969 oil and gas lease ranged from $878 in 2012
sale was a game-changer, to $2,072 in 2015, the year
said Eric Wohlforth, a state before they were capped.
revenue commissioner in The Legislature, with a
the early ‘70s and a former bipartisan House major-
Alaska Permanent Fund ity and GOP-led Senate,
Corp. board trustee. wants Dunleavy to consid-
“Suddenly we were a place er a roughly $1,600 check
that the bankers looked on this year.
with envy rather than just Many lawmakers say the
the poor supplicant,” he formula is unsustainable
said. and have balked at vio-
The sale reaped $900 mil- lating the draw rate and
lion that went toward infra- setting a precedent of dip-
structure and other needs ping deeper into the re-
but was pretty well spent serve.
around the time the pipe- Higher-than-expected
line came online in 1977, draws could reduce what’s
he said. available in earnings and
In 1976, voters approved at some point put pres-
creating the Alaska Perma- sure on the corporation
nent Fund and dedicating to change its strategies to
a portion of mineral wealth churn more money into the
to it. The fund, grown earnings reserve account,
through investments, was said Angela Rodell, the
valued as of June at $66 corporation’s CEO.
billion, with the earnings re- Carl Davis, research direc-
serve portion valued at $18 tor with the Washington,
billion. D.C.-based Institute on Tax-
The fund’s principal is con- ation and Economic Policy,
stitutionally protected but said cutting the dividend is
its earnings are spend- regressive, hitting lower-
able. Lawmakers had long income families particularly
limited use of earnings to hard. He sees no conflict
such things as fortifying between paying a divi-
the fund and paying divi- dend and taxing residents.
dends based on an aver- While some Democrats