Alaskans need only to look at their favorite institution to see how it’s possible to balance the needs of today with those of tomorrow.
The Alaska Permanent Fund was founded on oil and annually receives deposits from oil that over the years have totaled hundreds of millions of dollars. The Alaska Permanent Fund Corp. (APFC) invests these oil dollars, along with other Fund earnings, with a long-term vision based on a clearly defined mission:
“Maximize the value of Alaska’s oil revenues through prudent long-term investment and protection of principal to produce income to benefit all current and future generations of Alaskans.”
The APFC mission sums up the essence of the current oil tax debate: how do we pay today’s bills yet insure a vibrant economy for our children and grandchildren? An economy that will give them the opportunity to stay here, earn a good living and help write Alaska’s future.
The Legislature has invested three years to gather the information they need to achieve this delicate balance. They’ve learned that the current oil tax – Alaska’s Clear and Equitable Share (ACES) – is neither clear nor equitable. And while it might result in short-term surpluses in a state that depends on oil for 90 percent of its revenues, the ACES path leads to fiscal disaster.
Just consider what ACES has delivered:
■ North Slope production has plummeted by more than 200,000 barrels a day since ACES was passed in 2007.
■ The trans-Alaska pipeline is running on empty – with just one-fourth the oil it used to carry.
■ At a time when every other oil province in the nation is booming, Alaska’s North Slope is stagnant.
■ Investment in new oil production has fallen.
Alaskans understand that the ACES path is fraught with danger. They voted for ACES reform last November. They’ve turned out in overwhelming numbers this legislative session to testify in support of change. And 63 percent of them say it’s time for the Legislature to shelf the studies – and act, according to a recent poll.
That was the message from Alaskan after Alaskan last week. “What you do today will affect my grandson,” one woman told the members of the House Resources Committee. “I love my state and I want my children to be able to live here,” said another. “My goal is for my granddaughter to stay in Alaska,” said a third.
The governor laid out some fundamental principles that have guided the Legislature in their deliberations this session: reform must be fair, encourage new production, restore balance and be durable. The Make Alaska Competitive Coalition supports these principles and applauds the Legislature for the work they’ve done to date to date. Now it’s time for a final vote – to pass meaningful reform.
Every Alaskan gets proof in October that a long-term investment strategy pays dividends for today – and tomorrow – when they receive their share of Permanent Fund earnings. We can adopt a similar model with our oil taxes – one that encourages the investment we need to pay 90 percent of our bills today – and becomes the foundation of a healthy tomorrow.
Fix ACES – and unleash Alaska’s full potential.
Carl Brady is a longtime Alaska businessman, currently serving on the Board of Trustees for the Alaska Permanent Fund Corporation and is a Make Alaska Competitive Steering Committee member.