JUNEAU
Perhaps due to its overabundance of real estate, zoning laws and urban planning aren’t high priorities in Alaska. Nestled in one of the most spectacular natural settings of any city in America, downtown Juneau is like an aging Hollywood star who still looks gorgeous in panoramic shots but suffers under the scrutiny of close-up. The state capitol building, at the corner of Fourth and Main, might be mistaken for an elementary school anywhere else and looks out onto a district courthouse that could pass for the world’s largest Arby’s. Usually, the Alaska State Legislature meets only three to four months per calendar year, ending in April or May. When I arrived in June, legislators were deep into an emergency overtime session with no end in sight.
The financial problem Alaska’s government faced was a doozy. In part because of its size and varied topography and climate, Alaska spends almost three times the national average per capita on its citizens. The state once had the highest taxes in the United States. That burden quickly vanished when Prudhoe Bay crude began flowing though the Trans-Alaska Pipeline System in 1977. Much as New York City’s mood rises and falls to the rhythm of Wall Street’s movements, Alaska’s fortunes fluctuated for the next thirty-five years based on the price of crude. Starting in mid-2014, that figure began to fall precipitously, from nearly a hundred dollars a barrel to below thirty in less than eighteen months. Most of the United States celebrated as fuel prices tumbled. Alaska was suddenly looking at a deficit of four billion dollars in a 5.4-billion-dollar budget. Legislators had argued among themselves and with the governor for months about possible savings, but the most significant cut everyone had agreed on was chopping fifty million dollars from the state university system.
Alaska’s economy differs from those of other states not merely by degree. It has more in common with Venezuela’s than California’s. While fishing, mining, tourism, and other sectors of the economy account for a large percentage of Alaska’s jobs, the generous state budget relies on oil industry taxes for 90 percent of its revenues. Because of that, Alaskans now pay far and away the lowest average across-the-board individual taxes (i.e., state income tax, sales taxes, and property taxes) of any state in the nation. In 2015, Alaskans paid 524 dollars per person. The next-lowest state, New Hampshire, paid nearly three times that amount. Vermont residents paid the most: more than four thousand dollars per person.
But Alaska not only doesn’t tax its citizens much—it pays a lump sum to every man, woman, and child in the state each year simply for living there. The funds come from revenues earned by the Alaska Permanent Fund, a gigantic pile of money collected from oil companies and carefully invested since the pipeline opened. Over the past twenty years, the annual payout per person (called the Permanent Fund Dividend, or PFD) has averaged well over a thousand dollars and twice has exceeded two thousand dollars. The annual announcement of the dividend amount is major news in Alaska, a Powerball jackpot drawing in which everyone wins. About a month before the money’s dispersal, electronics stores and car dealers around Anchorage start posting signs that read SPEND YOUR DIVIDEND HERE. Libertarian Alaskans love to complain about government interference, but they love free money, too. (The head of one rural religious compound became a hero to property rights advocates when he fought the federal government over the right to bulldoze a road through a national park while collecting PFD checks for himself, his wife, and fifteen children.) When I arrived in Juneau, state legislators up for reelection were proclaiming the sacredness of PFD checks at a volume not heard in town since the ore-stamping machines shut down.
Not surprisingly, the oil industry is not shy about throwing its weight around in the capital. As I walked up and down the steep hills and wooden staircases of Juneau’s downtown, I couldn’t help but notice a surprising number of good restaurants for a city of thirty-three thousand people. The abundance of fine dining options makes more sense when you consider the quantity of lobbyists in town. It was no coincidence that the ten-digit deficit in Alaska’s state budget included five hundred million dollars in largely ineffectual tax credits for oil exploration. Sometimes the appeal on behalf of clients was more direct than a nice dinner. Just a couple of floors up from my room at the downtown Baranof Hotel, lobbyists for an oil services company had been recorded dispensing cash to lawmakers like an ATM. One state representative with his hand out was caught boasting that he “had to cheat, steal, beg, borrow, and lie” to help defeat a bill opposed by the oil industry. Another pleaded guilty to withdrawing a prospective piece of oil tax legislation for the grand sum of four thousand dollars. An environmental activist who joined me for a couple of cocktails bemoaned the difficulty of fighting Big Oil in Alaska. “What kills me isn’t just that these people prostituted themselves; it’s that they did it for so little money,” he said.
In their book about the Harriman Expedition, Looking Far North, historians William Goetzmann and Kay Sloan write that the experts aboard the Elder faced the “two Alaskas” problem, which was an environmental twist on Freud’s Madonna–whore complex: “the dual vision of Alaska as a wilderness to be preserved and a frontier to be exploited.” Modern Juneau was a good example of the two Alaskas. On one end of town, there is the Mendenhall Glacier, which is staggeringly beautiful, as impressive as anything in Yellowstone or Yosemite and, if you’re already in Juneau, remarkably accessible. I visited by catching a two-dollar public bus and then walking about a mile.
At the other end of Juneau, you have a small city founded on gold money and lubricated by petroleum dollars. I did visit one nice new building downtown, the Alaska State Library, Archives and Museum. Its construction had been funded by money from the last oil price spike, in 2008. It was Celebration week in Juneau, when Tsimshian, Haida, and Tlingit from throughout Southeast Alaska converge on the capital for several days of events and socializing. I recognized one dancer from Metlakatla by his conical hat and animal-skin singlet; he must’ve recognized me, too, because he looked at me as if I’d been following him. Celebration had siphoned off most of the museumgoers, and I had the huge state history hall almost to myself. The exhibits were excellent, and much of the space was devoted to the outsize role of oil in Alaska history.
The very quotable governor Wally Hickel put Alaska politicians’ buy-now-pay-later attitude toward resource development into practical terms when he famously said, “You can’t just let nature run wild.” After the largest oil field ever found in North America was located in one of the world’s least-friendly environments in 1968, Hickel dispatched a team of bulldozers to blaze a 550-mile dirt road through the pristine wilderness of what would soon be Gates of the Arctic National Park. When the spring thaw came, the path known informally as the Hickel Highway flooded, creating a muddy ditch that was soon obsolete.
Before settling on a pipeline, various other modes of getting Alaska’s oil to market were considered, including flying it out on jumbo jets. In August and September of 1969, the thousand-foot-long supertanker SS Manhattan, retrofitted as a sort of mega-icebreaker, attempted to make a trial run via the Northwest Passage and nearly got trapped in the polar ice. The verdict was that commercial sea traffic through the Arctic wasn’t feasible. Less than half a century and more than ten billion barrels of burned Prudhoe Bay crude later, the Arctic ice had melted so much due to climate change that adventurous tourists were now able to transit the route that Norwegian explorer Roald Amundsen had pioneered between 1903 and 1906. As I walked around the new state museum in Juneau, the luxury Crystal Serenity was preparing to become the largest cruise ship to cross the Northwest Passage, departing from Anchorage in August and sailing through the once impassable Arctic en route to New York City. Nine hundred tickets, starting at twenty thousand dollars and rising to more than a hundred thousand, had sold out almost immediately.