The ongoing geopolitical events occurring around the world remind us how interconnected Alaska is to global events. Sadly, these events are resulting in loss of life, terror in Ukraine, and economic disruptions felt around the world, including Alaska. Alaskans are experiencing high costs of energy and inflation impacts, all while recovering from a global pandemic and now the war. The price of oil is high, and the stock market is volatile.
Our legislature is discussing next year’s spending plan and the Department of Revenue released an updated revenue forecast on March 15th. Due to the increased price of oil, we are now forecasting increased revenues in the billions, resulting in a budget surplus and opportunity for us to replenish our savings accounts; assuming we maintain spending discipline.
The Department of Revenue is forecasting a budget surplus of $3.4 billion combined for fiscal year 2022 and FY 2023, after a dividend distribution to Alaskans of $3,780. Our finances have improved due to the tremendous investment returns the State of Alaska experienced last year, combined with the increased oil price.
Last year, the Alaska Permanent Fund grew by 29% to $82 billion and generated $20 billion in earnings, resulting in increased distributions available for future potential spending. The public employee’s retirement systems (PERS) funding levels have improved due to 30% market returns and are almost fully funded on a fair value basis. It was not long ago when we had the dubious distinction of having one of the largest per capita pension liabilities in the nation. We have now made a significant correction since that time to reduce the liability. While the price of oil now hovers in the $100 to $110 per barrel range, we have an opportunity to coalesce around a permanent fiscal solution for our state.
However, as the increased revenues enable the state’s fiscal position to improve, we realize that Alaskans are still recovering from the economic fallout of the pandemic, paying 44% more for a gallon of gas and increasing costs of food, labor, and supplies by ~8%. The average Alaskan household is spending over $5,200 annually due to inflation. This could be transitory inflation due to supply disruptions from the pandemic, and now the war in Ukraine, or it may be here to stay.
To help with these higher costs and to ensure Alaskans share in the wealth of the Permanent Fund, Governor Mike Dunleavy has proposed that the legislature appropriate an additional supplemental dividend this year of $1,216 and a full 50/50 dividend next year estimated to be $2,564, for a combined distribution to Alaskans of $3,780. Even after distributing the PFD to Alaskans, the state is projected to realize billions in surplus revenues, which should be saved to manage impacts of future oil-price volatility.
Thankfully, policymakers appear to be coming together towards a solution. At the beginning of March, the Alaska House Majority put legislation forward to set the PFD and include an additional “energy rebate” payment equal to the PFD requested by the Governor.
Those of us who have lived in Alaska for many years are familiar with the uncertainty associated with the rising and falling price of oil and investment market volatility. To manage the investment volatility, conservative formulas have been established to level out the highs and lows of market returns over a 5-year smoothing period. While these programs are in place and working as planned, it is critical to maintain spending discipline and recognize the importance of building up the savings reserves to manage potential future oil price volatility.
Now is the time to establish firm fiscal policies that will limit spending into the future and ensure that our reserves are replenished and protected such that we do not repeat the mistakes of the past. The last time the price of oil rallied significantly was between 2004 and 2013 – and in response, our state spending grew at an average rate of 14.6% per year. In 2019, the spending budget was $4.9 Billion, and the Governor’s 2023 proposal for spending was $4.6 billion.
Now is the time to convert the Alaska Permanent Fund to a true endowment fund and constitutionally limit spending to up to 5% of the value of the fund smoothed over 5 years. The change to an endowment will protect the Permanent fund for future generations and continue to be a source of revenue for the state.
We are presented with an opportunity to establish a fiscal plan. But Policymakers must make a choice; we can spend our surpluses like policymakers of the past have – leaving us in an unstable fiscal situation when oil revenues dry up OR we can enact sound fiscal policies such as establishing an effective spending cap, replenishing savings, and establishing firm rules for spending the Permanent Fund distributions.
I hope we can take this opportunity to put politics aside and choose that path with the benefit of future generations of Alaskans in mind.
If you are interested in receiving revenue updates from the Department of Revenue or would like to develop your own fiscal plan using the Department’s fiscal model for the State of Alaska, please visit our website at http://dor.alaska.gov.
Lucinda Mahoney, Commissioner
Alaska Dept. of Revenue
Alaska voters say it’s time for a change in the Senate
As the Alaska Republican Party holds its state convention this month, attention will naturally focus on the 2022 elections, most notably the selection of our next U.S. Senator. I’ve been running against incumbent Sen. Lisa Murkowski for over a year, and it’s clear that voters agree that it’s time for a change.
Because of a new election law, approved narrowly through a referendum crafted and promoted by Murkowski’s political allies, we no longer hold party primaries in Alaska. All candidates from all parties will run in a “jungle” primary on August 16 with the top four advancing to the general election, where voters have the option to rank their choices.
The reason for the change is obvious. There was no chance that Murkowski would win a Republican primary, so it was eliminated. And there’s good reason for Murkowski’s friends to think that way.
Because of a lengthy list of votes betraying Alaskan values, the Alaska Republican Party censured Murkowski and told her not to call herself a Republican anymore. I was honored to receive the endorsement of the party, and in the absence of an actual primary, I am proud to be carrying the conservative mantle as the true Republican candidate in this race.
All this is because Murkowski is a senator, owned by special interests, who casts votes simply to retain her popularity among the D.C. political elites.
In fact, this is what inspired me to run against Murkowski. She cast the tie-breaking vote to advance the nomination of the radical environmentalist Deb Haaland for Interior Secretary. At the time, Murkowski even admitted Haaland would be harmful to our interests, yet she voted to confirm her anyway.
Haaland, predictably, has gone on to lead President Joe Biden’s energy-annihilating agenda, which has targeted Alaska and killed our jobs.
And Murkowski has gone a lot further in cementing her place as Biden’s CEO – his Chief Enabling Officer.
She’s voted to confirm more than 90 percent of his cabinet appointments, including Agriculture Secretary Tom Vilsack, who moved to reinstate the “Roadless Rule” which cuts off our access to the Tongass National Forest. This was a huge blow to our timber and tourism industries and was another Biden job-killer.
But it goes back longer than that. In 2011, Murkowski voted for Obama’s federal judicial nominee Sharon Gleason, calling her “superb.” Judge Gleason went on to kill both the multi-billion-dollar Willow oil and gas project – and the thousands of jobs that went with it – and the life-saving King Cove Road, which would link people living in the Aleutians with medical treatment.
The most recent affront was her vote to confirm Biden nominee Judge Ketanji Brown Jackson to the Supreme Court. Jackson will join the Court with a record of leniency towards child predators and will almost certainly be an activist jurist, writing legislation from the bench.
Murkowski’s full-throated support of Obama and Biden judicial picks are in stark contrast to her blocking of President Trump’s conservative nominees to the Supreme Court. Murkowski opposed constitutionalist Justice Brett Kavanaugh and attempted to filibuster constitutionalist Justice Amy Coney Barrett.
Sometimes Murkowski offers the excuse that the results wouldn’t have changed even if she had voted differently. This is faulty on several levels. First, it reflects her belief that her vote doesn’t matter, and that she no longer can even trade her votes to benefit Alaska. Second, it implies that she considered objecting to nominees she ultimately supported, for which there’s no evidence. And third, it’s a clear admission that her votes do not represent Alaska’s interests.
If Lisa Murkowski will not stand up and raise havok when something is bad for Alaska, then she should clear out her offices and make room for someone who will.
Instead, she continues to fund our Alaska senate seat with dark money contributions from Big Tech, radical environmentalists, and leftist organizations from the Lower 48.
When I am the next senator from Alaska, I will stand up for our resource industries and revive our economy. I will fight for our rights, like the rights of parents to be involved in their children’s education, our constitutional and 2nd Amendment rights, and I will vote for only constitutionalist nominees. I will stand up against the horrendous Biden policies. And I will always side with Alaskans.
A poll for our campaign shows us beating Murkowski in November, but it also shows that 84 percent of Republicans, including majorities of both men and women, are with us in this race. An amazing majority of undecided voters and half of independent voters hold a negative opinion of Murkowski, as well.
These are the people who tell me over and over that their voices are not being heard in D.C. But I hear them, and they’re all saying, “It’s time for a change.”
Candidate for the U.S. Senate