ANCHORAGE, Alaska, (Reuters) -- Voters in Alaska Tuesday overwhelmingly rejected a proposal to trim their unique annual dividend and use some of the $26 billion state-owned Alaska Permanent Fund to pay for government services.
Alaskans -- who pay no state personal income tax, no state sales tax and who bear the nation's lightest gasoline tax -- told political leaders by a 4-to-1 margin that they do not want their annual oil-fund dividend check reduced.Preliminary results in the non-binding advisory election showed that about 82 percent of voters opposed the dividend -reduction plan and only 18 percent supported it.
Democratic Gov. Tony Knowles and most members of the Republican-controlled Legislature had endorsed the plan. But they will now have to craft a new budget plan "that's clearly more acceptable to the public," said Knowles spokesman Bob King.
"We see today's vote as part of a process toward finding a long-term balanced budget plan, and the administration is still committed to that," King said.
State Sen. Jerry Ward, an Anchorage Republican who opposed the plan, told Anchorage television station KTUU that voters "have now taken control of their government back."
"This is the greatest victory in the history of the state of Alaska," he told the television station.
The Permanent Fund, set up in 1977 with Alaska's then-new oil wealth, began paying annual dividends in 1980 to every Alaska adult and child. Last year, each Alaskan and about 12,000 out-of-state dwellers who qualified as residents received $1,540.88.
Legislators came up with the dividend-reduction plan earlier this year as a way to cope with what appeared to be a looming $1 billion budget gap--in a $2.3 billion budget--caused by dropping oil production and prices.
Oil royalties, taxes and fees fund about two-thirds of Alaska's general government operations. But production from the mature North Slope fields has fallen to about 1 million barrels a day, from the 1988 peak of over 2 million barrels a day. In addition, North Slope crude prices hit record lows last winter.
Knowles endorsed the dividend reduction after lawmakers rejected his long-term plan to combine new taxes, tax increases and a tap of Permanent Fund earnings.
Supporters included major oil companies, which gave a third of the $552,000 used in a campaign in favor of the ballot proposition by tourism companies, school boards, local governments and business groups. Many said they feared crippling new industry taxes or deeper cuts to state services.
Opponents of the plan included a rare mix of staunch conservatives, environmentalists and advocates for the poor.
Conservatives said budget cuts alone should solve the state's fiscal problems. Environmentalists said taxes should be hiked on oil drillers and other businesses that use natural resources. Others said the dividend tap amounted to a regressive tax that would hit poor Alaskans the hardest.
Some said the recent rebound in Alaska oil prices--to about $23 a barrel, the highest level since 1997, from last winter's record low--was helping to erase the state's fiscal crisis.
Others advocated a return of the personal income tax, which was abolished in 1980, as a fairer revenue generator.
Knowles introduced a bill to revive the tax early this year, but the state Senate unanimously rejected it.
Knowles also introduced a bill to raise the state's 8-cent-per-gallon gasoline tax, but it failed to get a hearing in the legislature.
King said Knowles would start work immediately on a new budget plan. The coming fiscal year's budget must be presented in mid-December, "and by law that budget has to be balanced," he said.