Energy relief bidding could get out of hand

Many Alaskans will be hurting under $5-a-gallon gasoline, and rural residents who pay even higher prices will hurt even more.

The state treasury, meanwhile, is flush with higher oil production tax and royalty checks, depositing tens of millions of dollars more each month than expected at the start of the year.

Oil at $100-plus a barrel is guilty on both counts — making people poorer and making the Alaska checkbook richer.

To use one to help the other, many Alaska lawmakers seem to be nervously coalescing around the idea of using much of the additional oil dollars to pay out what they are calling an “energy relief payment” to individuals later this year.

The House majority coalition was the first to go public with the $875 million idea that the state could help people pay the rising cost of gasoline to fill their cars and trucks, diesel to fill their home heating oil tanks, and all the other bills in life that are higher and will continue to increase in the world of triple-digit crude oil prices.

The payment would be about $1,300 per person.

The details will be worked out during the budget process in the House and Senate over the next couple of months, but the initial plan is to send out the energy relief payments as part of this fall’s Permanent Fund dividend distribution. Anyone eligible for the PFD would get the additional energy aid at the same time.

The intent and the politics of the energy relief payments are smart. Alaskans are hit hard by high fuel prices, and it’s reasonable for the state to share with the public some of its largesse from those same high prices. Not all of it, as the state needs to replenish its savings to cover for the next time oil prices drop, but share enough of it to help struggling households.

Supporters also see an added political benefit, hoping the energy relief money will diminish calls for a much larger PFD this year, as the reelection-driven governor and others continue to demand. Rather than pay a large dividend by overdrawing on the Permanent Fund, the energy relief payment would draw on excess oil revenues to reach the same outcome: More money to Alaskans this fall, totaling about what the governor wants.

And it would get the money to Alaskans without baking an unaffordable dividend formula into the annual budget recipe for future years.

The worry, however, is that once the budget plan with the energy relief payment hits the floor in the House and Senate for a vote, a bidding war may erupt.

“I have $1,300, do I hear $1,400. Now I have $1,400, do I hear $1,500. Back of the room, $1,500. Anyone, $1,600? Yes, the legislator in the plaid jacket. Now $1,700?”

Any House or Senate member can propose an amendment to drive the payments higher, and any political mishmash of 11 senators or 21 House members can approve an amendment. The risk of an election-year spending frenzy driving up the size of the relief check is a real concern. There should be limits, even at $100 oil.

The consumer pain of high oil prices will not last forever, while the needs of schools, the university, snowplowing and the ferry system will last forever, and the state needs to save some of the oil windfall for those needs, too.

A bidding war in the House or Senate could turn a well-intentioned relief program into a fiscal lead weight that drags down the state budget. Let’s hope a majority of legislators keep their hands down when the bidding opens.

 

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