My Turn: Fix the budget, but not at the expense of long-term prosperity
As falling global oil prices mean less revenue in Alaska, our elected leaders need to make sound budgetary decisions that solve the short-term problem without forgoing investments essential to the long-term future of the state. And we are facing challenging times ahead.
Since about 90 percent of our state revenue derived from taxes on the energy industry, the lower the price of oil, the bigger the impact on Alaska’s budget. With oil prices near $50 a barrel, the new governor and incoming members of the state Legislature will have many tough choices to make in 2015. Some reports put the pending budget deficit at $3.5 billion, which equals half of all discretionary spending for things like schools and essential services.
Thankfully, Gov. Bill Walker is already taking responsible steps to address the looming crisis by reviewing all spending, suggesting painful cuts and putting a hold on “megaprojects” including the Juneau Access Project. Yet in this time of crisis, even worse for our state than low oil prices would be shortsighted decision making. This is why I was glad to see the governor keep his campaign promise and exclude the Alaska Liquefied Natural Gas (LNG) Project from his list of items to mothball.
Alaska’s North Slope is home to some of the world’s largest untapped reserves of natural gas. Much like oil has sustained our state since the creation of the trans-Alaska Pipeline System, those gas reserves are the key to our future. Unlike the failed tries of the past, historic steps have been taken in the last year toward finally developing the gas. Halting that progress would be the very definition of shortsighted and would almost certainly set us back decades.
Complete with an 800-mile gas pipeline from South central Alaska to the North Slope, a gas treatment plant and an LNG plant, the Alaska LNG project is expected to draw nearly $60 billion in new private investment to the state. Needless to say, a lot of Alaska businesses are excited about the prospect of what amounts to perhaps the largest infrastructure project in North American history getting underway right here in our state.
The Alaska LNG project represents a massive investment that would solidify our economy — and boost state and local tax revenue — for generations to come. For starters, it would create up to 15,000 construction and design jobs as well as 1,000 long-term operational jobs. As an Alaskan small-business owner, I’m already hiring for some of the amazing preliminary work being done at Point Thompson. That project, which will be a cornerstone for the future gas line, created the opportunity for my company to hire Alaskans and grow for future years.
The Alaska LNG Project will also provide some much needed diversification to our state energy economy that is increasingly dependent on crude oil — which against the backdrop of rapidly declining prices should be an urgent priority.
In 2015, we may have a new legislature and a new chief executive in Juneau, but the rationale for the Alaska LNG Project is unchanged and overwhelmingly positive for our state. We have come too far with this once-in-a-lifetime opportunity to let all of the progress we’ve made go to waste. I hope that our state’s leaders do whatever they can to move the project forward.
All Alaskans stand to benefit. Gov. Walker has long portrayed himself as the man to get the gas line done, and I hope he doesn’t take us backward. We have committed too much, and have too much at stake, to turn back now.
• Ron Hyde is the President and CEO of PRL Logistics, an Alaskan-owned small business with worldwide strategic alliances.