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Viewpoints: Letters / Opinions

Path to a fiscally sustainable budget

By Rep. Dan Ortiz


June 09, 2016
Thursday PM

In the current budget that was approved by the majority of Alaskan Legislators, 430 million dollars is allocated for direct cash payouts to oil companies in the form of credits. The state’s obligation for this year’s credits is 750 million dollars. Thus, even if the State of Alaska pays out the allocated 430 million dollars, it will continue to be responsible for 320 million dollars additionally in future obligations. That 750 million dollars is the third biggest spending item in our state’s budget. Under SB 21, the state is obligated to pay 750 million dollars in oil tax credits in one year alone, while we are spending 221 million for our Department of Transportation, which runs and maintains our ferries, roads, and airports; the infrastructure that facilitates our economy.

A House bi-partisan coalition, of which I was a member, crafted a version of the oil tax credit bill HB 247 that would have saved 4.2 billion dollars in state credit obligations, or tax write-offs, to the oil industry over a five year period. The House version provided a more modest credit program to incentivize the industry. The majority of Alaskan senators chose not to adopt that version of the bill. Their version of HB 247 eventually passed both the Senate and the House. This version will continue to allow oil companies producing in the North Slope to write off, or carry over, losses incurred here on Alaskan land or abroad.

I believe it is in the best interests of all Alaskans that we establish a fiscally sustainable budget plan. I am an outspoken proponent for creating a sustainable government. My recent votes against adopting the budget, but supporting the CBR draw, brought attention to the fact that the State of Alaska is not on the path to a sustainable budget.

I will soon be asked to vote on HB 245, which calls for a 1,000 dollar cap on the permanent fund dividend. Last year our PFD was just over 2,000 dollars. The dividend represents our share of our oil resources, owned collectively by Alaskan residents. If I were to vote for HB 245, and the projected dividend were to again be 2000 dollars, HB 245 would take approximately 1,000 dollars out of each and every Alaskan's pocket for oil companies. Remember, there are approximately 725,000 recipients of the PFD. This population number multiplied by 1000 equals $725 million.

However, the effects of HB 245 are not that simple. HB 245 would allow for a 5% annual draw of the Permanent Fund itself, that draw would equate to about 2.8 billion, which could go into the operating budget. If the fund continues to earn 8 percent on its investments, the principal will continue to increase. If we don’t take this action, we will fund the budget deficit by taking money out of savings. With a deficit of 3.8 billion dollars, our savings accounts will be quickly drained and we won’t have the resources to pay out any dividend at all in several years.

The question I must answer is whether a yes or no vote on HB 245 in the best interests of the Alaskan people and the residents of District 36. If you care to weigh in with your opinion, you can email me at or call (907) 247-4672.

Rep. Dan Ortiz
Ketchikan, Alaska

Received June 09, 2016 - Published June 09, 2016

About: Dan Ortiz is an independent member of the Alaska House of Representatives, who has since 2015 represented the 36th District. He is the only independent in the Alaska State Legislature.


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