Wrangell has several multimillion-dollar problems: Replacing the water reservoir dams and repairing the piping; rebuilding the water-damaged Public Safety Building; and reusing or demolishing the old hospital building.
Even with the highest sales tax rate in the state, even if tourist spending fully recovers next year and the economy grows, there wouldn't be enough sales tax receipts coming in to cover the costs of even one of the projects, let alone all three essential community needs.
Sure, voters could approve bond issues for some of the work and the borough could pay back the debt with higher property tax rates, adding maybe $1,000 a year in taxes on an average home. That's not even counting the full cost of the reservoir dams, estimated at $50 million. Water rates would have to increase significantly to help cover that cost.
That's far more than Wrangell can afford.
Or, as Alaska cities and boroughs have done since the 1970s, Wrangell could look to the state for help.
Until the mid-2010s, the Legislature would routinely appropriate funds for community projects, sharing the wealth of oil revenues across the state. Alas, those plentiful oil days are over. The trans-Alaska oil pipeline is three-quarters empty, and oil dollars provide less than one-third of state general fund revenues.
The state - its residents and their community needs - have relied on investment earnings of the Alaska Permanent Fund the past few years to cover about 60% of the cost of state spending. That's what the fund was created for almost 50 years ago - to help fund public services as oil dollars went into permanent decline.
The math problem is that those same dollars also pay the annual Permanent Fund dividend, and therein lies the dilemma.
The more money that goes to the dividend, the less money available for community needs, such as water reservoirs and public safety buildings.
Legislators this month are stuck in in the mud in Juneau, spinning their wheels as the governor's shamelessly promotes a bigger dividend and says Alaska can deal with paying the bills some other time. Many legislators like the governor's politically crass idea of putting more money into voters' pockets. But just as many legislators sees it as an irresponsible fiscal game of chicken: Spend until the Permanent Fund nears the cliff and then hope we can stop in time, or bail out and let someone else pick up the pieces.
The issue for Wrangell, and other communities across the state, is that the money spent on dividends will not be available for legislators to appropriate as state grants for water reservoirs, public safety buildings, school repairs or other needs.
Alaskans need to decide if the Permanent Fund exists primarily to serve individuals' wants or community needs. If the vote is for individual wants, then residents should prepare themselves for signing over their PFDs, and more, to ensure the community's needs are met.
The politics are harder than the math.
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