By TUCKERMAN BABCOCK
The socialist urge is always strong. Perhaps without even realizing it, Chris Nyman did a fine job in his recent column arguing for Socialism and state power over free enterprise, private ownership and individual freedom.
His objective was to take what little direct dividend individual Alaskans receive from the production of their shared ownership of oil and gas. He wants every penny owned to you to instead go directly to the State of Alaska. He says it is to advance conservative policy, but his approach is like Emperor Montezuma sending wagons of gold to the Spanish hoping to appease their lust for more. It only made things worse.
We can and should dismiss his rhetorical statements of PFD “misconceptions” – none of which is true and none of which is discussed in his own column.
Let us review facts.
Back in the 1950s, the federal government forced Alaska to adopt a Socialist approach to subsurface mineral rights. In most States, such as the Dakotas, Pennsylvania, Texas, Louisiana, etc., individuals own land, subsurface rights, and the wealth that comes from developing their land. The various State governments then tax the people to pay for programs and services. That is the free enterprise and capitalist model.
With every subsurface well or mine the owners receive a royalty payment. Royalty payments are income to the owners, not the State.
Alaska was forced down a Socialist path. The State “owns” most subsurface oil and gas. The people still own the subsurface minerals (oil and gas among them), but we own it collectively. As former Governor Hickel sagaciously discerned, we are an Owner State. What do we do with this anomaly?
Now, if you want to go full Socialist, then every penny of value, not just taxes, but the royalty payment due the owners, should be gobbled up and retained by the State. Nothing for individuals. Only handouts from government. Full socialism.
The State would be supreme overlord, supreme judge, and supreme master of every such dollar. Not one penny should go directly to the great unwashed, the little people who actually own the resource: those pesky individual Alaskans.
Rather than blunder down the full Socialist road, those that came before us exercised some good judgment. Gov. Jay Hammond, the people through a constitutional amendment, and legislators in the late 1970s and early 1980s, decided that severance taxes, production taxes, and misc. other taxes should flow directly to state spending. But then they did something the Socialists, the politically connected and those that make a living off state spending did not expect. They recognized the rights of individuals to the subsurface ownership and provided for some benefit from that ownership. At least a little.
They did not intercept 100% of the royalty payments due to the owners. Instead, they set aside 25% of the royalty payment in a Permanent Fund. That was the best they could do. They still intercepted and taxed the other 75% of the royalty payments actually due to the owners – that is, all individual Alaskans.
Then they decided to allow the owners (individual Alaskans) to receive a dividend from the realized earnings of the Permanent Fund. The governor and Legislature set a formula in place that provided for approximately 50% of the realized earnings from the Permanent Fund to go directly to the actual owners of the subsurface minerals: individual Alaskans.
For more than 30 years the Permanent Fund grew and grew. The dividends were paid, never from taxes, never from any budget, but directly from the actual realized earnings of the Permanent Fund. The other 50% of earnings from the Fund were available to spend any way the government wished.
The statutory formula remains in full force. But for now, it is another law ignored.
Enough is never enough for government. Spending grew and grew. The programs, salaries, benefits, buildings, and greed knew few bounds.
Severance taxes, production taxes, corporate taxes, gas taxes, fish taxes and half the earnings of the Permanent Fund…the government spent every penny.
There were times when government had so much money from those sources that billions upon billions of dollars were saved in the Constitutional Budget Reserve. For the lean years.
What did most politicians and especially the Socialist utopians do with all those riches?
Spent every penny.
Borrowed every penny.
Ran up billions in debt in fantastical promises for pensions no one could possibly afford. Underfunded by many billions of dollars.
And then government’s greedy eyes turned to the dividends faithfully paid to the owners of so much of the oil and gas in Alaska: individual Alaskans.
It started with the scoundrel, former Gov. Bill Walker, who ignored state law and vetoed the transfer of the dividends to the people.
Then legislators – long shy about imposing such a money grab and tax on the tiny dividend (a tiny share of the vast wealth generated by developing the oil and gas owned by all Alaskans) – became emboldened by Gov. Walker’s taking of the dividend. They stopped transferring the dividend – ignoring state law and capriciously setting whatever they felt like for a “dividend.”
These statists and Socialists hate the idea of individual ownership, individuals receiving a dividend from the royalty from their own oil and gas; they want every penny for government.
Despite the view of folks like Chris Nyman, no wagons of gold paid as tribute will ever satisfy the bottomless greed of government.
Those who fear the taxman will go after them simply hope that by sacrificing all the little people and their dividends, the day of reckoning will be postponed. The fact is that there is no limit to the appetite for spending, no limit to the growth, power and debt of government…except the determination of the people to limit the size and scope of government.
It is your money Alaskans. It is your oil and gas. It is your children who are now paying the price of the profligate and boundless growth and waste of government.
If they take the dividend today, they will come with sales and income taxes tomorrow. Divide and conquer, a tactic used for centuries. Chris Nyman should know better.
Tuckerman Babcock has been an Alaskan since January 1966. He worked for five legislators, two governors, served 10 years with Matanuska Electric Association, 3 and 1⁄2 years as a commissioner of the Alaska Oil and Gas Conservation Commission. He has been a homemaker and former volunteer chair, Alaska Republican Party. Most recently, he chaired Gov. Mike Dunleavy’s transition team and was the first chief of staff (retired August 2019). He lives in Soldotna with his wife and family.