COVID-19 notwithstanding, Alaska is about to sail into a fiscal “perfect storm” of low oil revenues plus low investment returns to the Permanent Fund. These are the two sources of the billions in revenue this state now requires. While other sources of revenue are not to be dismissed, they will not generate that kind of revenue when one considers that $1 billion is the same as 1,000 times as much as $1 million.
To continue the weather analogy, our “ship of state” is not rigged for this foul weather. How did we arrive at this sorry state of preparedness? At least three major failures occurred. First, our state government failed to appreciate the inherent warning included in the definition of oil when it is described as a “nonrenewable resource.” “Nonrenewable” means that while you may find more oil, eventually you will run out of it.
Second, we were willing to deceive ourselves with the hope that another Prudhoe Bay equivalent “mega-project” — e.g., natural gas export project — would suddenly return us to the halcyon days of massive oil income.
Third, even after the market crash of in the last decade, we again deceived ourselves into believing future investment returns to the Permanent Fund could only increase in annual double-digit returns.
Alaska’s leaders have sowed the seeds of this crisis over time and now had better be willing to accept and deal with a bitter harvest made even worse by a pandemic.
— Lynn Willis
Eagle River
Have something on your mind? Send to letters@adn.com or click here to submit via any web browser. Letters under 200 words have the best chance of being published. Writers should disclose any personal or professional connections with the subjects of their letters. Letters are edited for accuracy, clarity and length.