WITH the super-giant Prudhoe Bay oil field past its production
peak, no huge new oil developments on the horizon, and oil prices
slumping, Alaska's long, free oil ride is nearing an end.
Daily oil production that fuels the state treasury peaked at 2.1
million barrels in 1988. It is expected to drop to half that by the
year 2000, forcing reevaluations by the state government.
"At one time we were filthy rich. Now we're just rich," said
House Speaker Ben Grussendorf, a Sitka Democrat, just after the
Alaska House of Representatives passed, last week, a $2.37 billion
operating budget for fiscal year 1993.
The budget includes boosted user fees and a gasoline tax hiked
from the nation's lowest rate to the United States average. It
draws on reserve funds, and cuts popular programs and agencies
across the board.
Trimming some $138 million from the budget Gov. Walter Hickel
introduced and erasing a looming deficit estimated at $300 million
to $1 billion was grueling and draining, House members said.
"It was the hardest budget that I've ever worked on. It was the
first time that I've ever heard of that a governor's proposed
budget has been reduced," said Anchorage Republican Ramona Barnes,
a finance committee member. Still, she added, "The cuts were easy
this year compared to what you'll get from now on, because from now
on you'll have to eliminate whole programs."
Legislators and some business leaders have even begun to mention
the once-unmentionable: the return of the state personal income tax
that was repealed in 1980, a year when oil wealth appeared endless
to many Alaskans.
A bill that would bring back the state income tax - a bill that
no one at the state capitol here expects to survive in an election
year - has gotten a surprisingly warm reception.
Fairbanks Democrat Niilo Koponen, who has championed the return
of the income tax for six years, said intelligent Alaskans know
that the 1980 repeal was a mistake.
A proud "Alaskan Before Statehood," Mr. Koponen said he
remembers the days when Alaskans paid state income taxes without
complaints and budget limits forced certain tasks to be left
undone, such as winter snowplowing on the sparse highway network.
But that was before the North Slope oil boom, which sent the
first oil down the trans-Alaska pipeline in 1977 and brought to
Alaska a population explosion and building binge.
Now, no other US state government is so dependent on oil.
Eighty-five percent of Alaska's operating budget comes from
royalties, taxes, and fees from oil. A $1-per-barrel change in
Alaska North Slope crude prices means about $150 million a year in
revenues to the state treasury.
Fishing tops oil
While the oil industry is said to lag behind fishing and, some
say, tourism in total private employment here, state government
spending is critical to the economy and the maintenance of a life
style that could not be provided through the private sector in this
sparsely populated region.
And no other state is so generous to its residents. The average
Alaskan pays a few hundred dollars a year in all local and state
fees and taxes, while receiving $6,000 a year in direct state
government benefits, according to the Institute of Social and
Economic Research at the University of Alaska (Anchorage). …