When the Alaska Permanent Fund was created in 1976, I was a young man of 18 at work on the trans-Alaska oil pipeline, but I understood fully what we were doing in the 49th state. We were banking some money in recognition that the oil wouldn't last forever, and we'd need some savings someday.
Personally, I was thinking along similar lines. It didn't take a genius to see that work on the pipeline wasn't going to last forever. The jobs were going to go just as soon as the line was complete. Some people didn't seem to care.
With pockets stuffed with cash in quantities they'd never imagined, pipeliners found it hard to resist the temptation to spend, spend, spend. Too many of them blew every dollar. Maybe I just got lucky in that I loved heavy equipment.
I bought trucks and bulldozers and backhoes, and by 1986 had enough equipment that with help from my wife, Dana, we could start Cruz Construction Inc. It grew from almost nothing into a family of companies that now employs up to 600 people.
We are somewhat unique. We started in Alaska and diversified our operations into Canada and the Midwest. We're not one of those companies coming north to work in the 49th state only to haul Alaska wealth south. We're trying to bring some of that southern wealth north.
Why? Because we love Alaska. I was born in Anchorage. Dana traces her roots back to immigrant ancestors of the Matanuska Valley Colony. We've been here a long time, and we plan to stay, as do our children.
The only problem is none of us can survive without a healthy economy, and the Alaska economy is at the moment in serious trouble. Falling global oil prices have slowed production in the oil patch, forced sizable layoffs there, reduced state capital spending on construction projects to almost nothing, and left an oil-dependent state government about $4 billion in the red.
Yes, some of the latter problem is of our own making. When we were flush with oil-tax monies, we grew the bureaucracy without much thought to what we could afford. Going forward, we're clearly going to have to shrink the size of government, but if we do that too fast now, we'll likely turn an economic slowdown into a serious recession.
That would be foolish, and we don't need to do it because Alaska's political leaders were smart enough to create that Permanent Fund back in 1976, and because Alaska lawmakers kept adding to the fund over the years that followed. Say all the bad things you want about them, but give them credit for this: we are today sitting on about $53 billion in savings.
We have so much money in the bank, so to speak, we don't need to spend it (as originally intended) to solve our fiscal problem. We can simply use the interest earnings on the fund, in all or in part, to help stabilize government spending that has historically yo-yoed through time as oil prices went up and down.
Granted, some of the revenue plans now being talked about might reduce the size of the Permanent Fund dividend that came along in 1980. I love the dividend as much as anyone, but let's be honest. It has created a sense of entitlement among Alaskans that didn't exist when I was a kid growing up here.
Back then, we were all interested in moving Alaska forward, not worrying about what we could get out of Alaska. The PFD is a nice benefit for those of us who live in the state, but not everyone lives here long. Given the state's rate of annual out-migration, now higher than anytime since 1988, you can figure 10 percent of the people who collect the dividend this year will be gone next year.
And it looks like that trend could continue for some years to come because of a weakening economy. I know I don't want this to be a state where people simply come to visit for a few years, then take the money and run. And I don't think most Alaskans want that.
I think we all want to build a stable Alaska economy that encourages people to stay -- as my family has -- and build this state toward a future. To do that, we need to start taking advantage of not just oil, but all of our resources -- mining, fisheries, timber, natural gas and the Permanent Fund earnings reserve.
Yes, the Permanent Fund earnings reserve. Like it or not, at the moment those reserves are the state's biggest source of revenue. We need to tap it like we would an oil well and start pumping out the cash needed to sustain us until we figure out how to diversify our economy in other ways.
Dave Cruz, with his wife Dana, is the founder of Cruz Construction Inc.
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