Part 10: “OIL COMPANY” WALKER, “OIL CAN” ORTIZ AND OIL COMPANY SOCIALISM
By David G Hanger
May 23, 2016
Furthermore, what it does immediately is destroy the proposed foundation for financing the state government in perpetuity, i.e. the earnings reserve account of the Permanent Fund. If the Fund increases in value by the $2.9 billion it did last year (less likely because the Fund balance has already been diminished), the Permanent Fund will be no more than $49 billion, in one year only down from its peak of $52.8 billion.
That also eliminates any possibility of any kind of Permanent Fund Dividend whatsoever after this year.
So for a family of four earning $100,000 a year living near 1000 miles away from Anchorage and almost a continent away from the oilfields these are the projected consequences within one year, at most two, of this date: First, the Permanent Fund Dividend is gone, so $2000x4=$8000 is also gone. That is an eight percent decline to your income. Next, however, is a proposed state income tax of 6% to 10% with the 10% number lately being preferred by the government wonks. So at this point before we study anything else your income is down 14% to 18%.
One of the more punishing and vicious aspects of this if you are a family of four earning $50,000 your income loss in the first instance is 16%, not 8%, thus at this income level the reduction in income (and buying power) is 22% to 26%.
Even at this first level it gets more complicated than is immediately obvious. For if you were merely to decide to take more time off from work to spend time with the wife and kids, say $10,000 worth, your income and buying power would only decline 10% from $100,000. The price of goods and services overall is not in any way affected by your personal decision.
But when everybody is getting this reduction in income and this increase in tax, you set off another type of food fight where all the merchants are jacking up their prices to account for their lost economic ground. That will jack up the price at least another 10% and probably more, thus at this juncture for the family earning $100,000 a year within a year or two their income and their relative buying power will be reduced by anywhere from 24% to 28%. For a family earning $50,000 a year the decline is 32% to 36%.
This, of course, is just the first level. At the first level, easily attainable within two years, your buying power is reduced no less than 20%, for incomes in the $50,000 range almost 30%, and with price increases, etc. that reduction is more likely 25% for the folks in the $100,000 earnings range and a whopping one-third and more for those earning $50,000.
We have not yet begun to discuss user fee increases and local tax increases, but the user fees are already here and the local tax increases have already been proposed with many more to follow.
RUN THE NUMBERS FOR YOURSELVES AND IF YOU COME UP WITH ANYTHING BETTER, LET ME KNOW. The smart money is already bailing if you haven’t noticed, starting with older folks in business. They are not stupid, and they see what is happening. The way this game is being played your buying power and/or your income will go down one-third or more if you are earning around $100,000, conceivably by 50% if you are in the $50,000 income range.
THAT IS THE COST TO US FOR BEING FORCED INTO JOINING AND FINANCING THE ANCHORAGE/FAIRBANKS CORRIDOR’S RAPTUROUS OBSESSION WITH “THE BEGINNING.”
Our economy was doing fine down here, and then along came this “Coghill Abomination.”
In its own way it is ironic that the first local to speak when Governor Walker visited Ketchikan on March 1 begged him to build a bridge to the airport. What has always made this an absurd project is its cost in the first instance and its maintenance in the second. This community cannot sustain an ongoing project the size of the Golden Gate Bridge, and any suspension bridge is a perpetual, ongoing project. Its moniker as the “bridge to nowhere” is now lexicon in U.S. political discourse.
The “Coghill Abomination” in its most fundamental terms is another “bridge to nowhere,” and “the Beginning” is what is perceived as the end point of this project. We have all been sucked into the maw of an absurdist concept that subsidizing the private sector oil industry leads directly to the continued subsidization and population sustainment of the Anchorage/Fairbanks corridor for a period of no less than 10 years. At the end of that ten year period shall commence “the Beginning,” i.e. the Natural Gas Pipeline which will then return us all to those thrilling days of yesteryear.
SURPRISE OF SURPRISES!!! THIS WHOLE CONCEPT IS BLOWING UP IN THEIR FACES BY THE END OF THE FIRST TWO CYCLES.
Having 20% to 50% of your income and buying power just arbitrarily taken from you to subsidize two medium-sized cities and a greed-obsessed oil industry that wants it all and then some, all without any real prior notice at all, let alone opportunity to vote it up or down, is an economic rape job of massive proportion and consequence. With the exception of the Juneau Empire’s infantile crap “Tax Us, Please, Tax Us,” the media in Southeast has essentially been silent on this subject. If they discuss it at all, they discuss it in terms of oil prices going down, a level of naivete that does not justify their claim to be journalists, or even reporters.
By the time we get to the second level of consequence, the mid-term, say five years out, the situation becomes dire in a more tangible way. By this point in time the roads in the neighborhoods are being converted back to dirt roads, and if something is not done, Tongass Highway from the Coast Guard Base to Bugge Beach will be a dirt road by that time, too. We have been told we will be awarded a $97 million ‘gift’ from the State, which might help for a while, but how are they going to give us this money when they cannot even balance the State budget? We’ll see.
I hope you all are big fans of Anchorage and Fairbanks because these cretins are in process of bleeding you dry for their benefit only.
Next, THE GREAT ALASKA DEPRESSION IS COMING. CAN ANYTHING BE DONE TO STOP IT?
The short answer is ‘no.’
David G Hanger
Received May 23, 2016 - Published May 23, 2016
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