September 16, 2008
Tuesday

On August 17th, Mr. Byron Whitesides of Ketchikan posted a copy of a recent letter he sent to me regarding the resource rebate passed last month. Here is a copy of the response I sent to Mr. Whitesides today [September 09, 2008].

Thank you,

Bert Stedman


Byron -

Thanks for taking the time to contact me and share your thoughts. While the state reaps huge financial benefits from high oil prices, individual Alaskans are being forced to pay increasingly high prices for heat, power and transportation.

It's understandable that folks are confused about the vote the legislature took last month. On May 15th, Governor Palin set an expectation that she was calling the legislature back into Session to tackle high energy costs. On that day, she announced a two-part $1.2 billion energy relief package ­ debit cards for individual Alaskans and capital grants for electric utilities. The debit cards would provide all eligible PFD recipients with a $100 per month credit towards energy purchases and the utility grant program would lower residential electrical rates by 60%. However, less than 30 days later, both ideas were dropped and replaced with a $1,200 per resident "resource rebate".

As I'm sure you are aware, the legislature ultimately approved the $1,200 one-time payment which will be added to the FY08 permanent fund dividend checks going out this week. The Governor originally proposed making 6-month residents eligible for the payment. However, she also promoted the rebate as "a special one-time payment to share some of the state's wealth". Well, the Permanent Fund is how individual Alaskans share in the state's resource wealth. Since this payment is clearly not energy relief, there is little justification for broadening eligibility beyond those who are currently eligible to receive a Permanent Fund Dividend (PFD). The eligibility criteria and one-year residency requirement of the existing PFD program has been tested in court and is likely to be upheld if challenged. I'm sorry if you or some members of your family aren't eligible to receive this year's payment.

I voted against this extra "resource rebate" payment. It's simply bad public policy. The resource rebate payment isn't based on financial need and there is no connection to actual energy costs. These cash payments won't lower your energy costs or help address the root causes of Alaska's complex energy problems. They will do nothing to reduce energy consumption, encourage conservation or promote efficiency. Alaska's resources are commonly owned and the state has serious long-term needs. When we are fortunate enough to derive excess revenue from our resources, it should be invested for maximum statewide benefit. Creating a supplemental program to pay a windfall oil bonus is irresponsible and extremely shortsighted. At a cost of $750 million, the rebate is expensive and extremely inefficient. Invested collectively, the money could help fund important energy projects capable of providing real energy savings over the long term. Paying it out individually dilutes our purchasing power and subjects the payments to federal taxes. As much as 20% or $150 million of these payments will go directly to the U.S. Government.

Not all Alaskans are affected equally by high fuel prices. A comprehensive energy plan would have targeted those in need and provided assistance to those most affected by high fuel costs. $1,200 is too much to pay for some people and not enough for others. Clearly, the problem is greatest in areas that use diesel fuel to heat homes and to generate electricity. The Senate plan I supported, would have provided energy subsidies to every resident who heats with electricity, heating oil or natural gas. The two-year Senate plan, would have based payments on an individual's actual out-of-pocket energy costs and all qualified Alaskans would have been eligible ­ not just those who receive a PFD. I believe this was a much more focused and responsible approach to providing state assistance for short-term energy costs.

High energy costs continue to be one of the toughest economic challenges facing our state. I'm happy that the state is in a position to financially assist Alaskans in the short term. However, we need to continue working on comprehensive energy reform during the next legislative session.

Regards,

Bert Stedman

Ketchikan, AK

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Received September 09, 2008 - Published September 16, 2008

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