Three Comments: Alaska’s Unsustainable Economy Is Based On Predatory Taxes And Wasteful Spending

by

Dave Harbour

(See TransCanada’s Newest Edition of “Update Magazine”)

Comment 1 of 3:  Here’s a concept: a gasline can only materialize when the markets call for construction and when investors believe they will make a reasonable return on and of their investments.  Since the three major Alaska North Slope producers are the major potential gas pipeline investors, they must believe that their Alaskan assets are safe from unpredictable expropriation by Alaska through imposition of future, predatory tax policies.  It seems clear, then, that those wishing not to improve the investment climate for big investors can only have in mind high-grading the revenue stream for all it’s worth now, disregarding that improving the investment climate could produce revenues that could sustain future Alaskan economies, jobs and newer generations.  -dh

More below….

Comment 2 of 3.  Yesterday, the Senate presented a nearly $3 billion capital project budget which we believe is designed to move public money from the Alaska treasury directly into the coffers of AFL-CIO Vince Beltrami’s (NGP Photo) organization via Davis-Bacon projects.

A few weeks ago, one recalls that Beltrami had told the House Resources Committee that his special interest profited less from tax reform than by state spending on capital projects which funnel money into ‘prevailing wages’.  (Note that a state official says the purpose of prevailing wage regulation is to “…level the playing field for contractors to bid on public construction projects.”

This disingenuous statement really means that the cost of the playing field will be elevated by forcing all contractors to pay ‘state decreed prevailing wages’ not the wages they could bid competitively absent such legislation.)  This process has likely caused Alaskans to be deprived of their Constitutional (Section VIII) right to having the maximum benefit from natural resource development over the last several decades.  In fact, by spending 2 or more  times what honest competition could produce for the public dollar, Alaskans have likely received only half of the municipal and state projects they could now be enjoying were public monies by law not required to be funneled into special interest pockets in this manner.

The government-sanctioned, wasteful and unfair cost of the organized labor monopoly is public corruption made legal by a majority of lawmakers.  But it is not freedom, it is not right and it will be partially responsible for bankrupting the state after first fleecing it of all its Permanent Fund savings.

The fleecing of Alaska’s natural resource treasure will occur because irresponsible capital spending on special interest projects that waste half of our public dollars will deplete savings accounts.

Since Alaska’s source of revenue (i.e. oil production) is depleting at a 7% annual rate while its spending is increasing by double digits, soon the state will have to tap more and more of its savings accounts to fund the operations of the state.

When Alaska’s discretionary savings accounts are depleted, the only other source of revenue for lawmakers to allocate will be Permanent Fund savings.    By that time–just a few years from now–the public will have a terrible choice between huge programmatic spending cuts or an increasingly larger tap of Permanent Fund savings, year after year, plus imposition of massive new taxes and fees throughout the economy.

This unsustainable, economic scenario could be prevented by stopping capital spending until operating revenues become sustainable again–most likely by new legislators with the insight, intelligence and courage to both restrain spending and lower taxes to attract investment.  Eliminating overspending on the labor monopoly for public sector projects — and re-instituting honest competition among contractors — would be a step in the right direction as well.    -dh  (See KTUU Story)

Comment 3 of 3.  Legislators have plenty of money to build new monuments to themselves–as long as they keep current predatory taxes in place at the expense of their children’s’ economy.

Sure, a new Legislative office building would be competitively bid–as long as all bidders agree to pay mandated, overpriced Davis-Bacon wages.

While the Davis-Bacon advocates claim its monopoly produces a ‘level playing field’, one cannot dispute that it is designed to shovel public monies into the cash registers of special interests.  -dh  See ADN story.  See Alaska Standard Op-Ed.