Brennan: Modify the Jones Act

By Tom Brennan |

The Alaska Permanent Fund was designed for times like these. Hopefully it will be able to fund state government while tax revenues are low.

This week, the fund balance was more than $74 billion including $16 billion in the Earnings Reserve Account. That $16 billion generally is dipped into to cover much of the state’s annual budget, which these days runs north of $4 billion, as well as our annual dividend checks.

We do have oil royalties and corporate taxes, but those are both down due to falling oil production and corporate casualties during the pandemic.

And it will be interesting to see how large those dividend checks are going to be this year. The Legislature will have a lot of noodling to do when deciding the amount since the Permanent Fund’s Earnings Reserve will need to carry the state for probably quite a while.

It looks like the foundation for our economy is going to be — barring any big surprises — good old tourism. And that would seem a promising prospect this year because people have been penned up for the last year and are ready to get out of the house.

The view from my den window is of Cook Inlet, Sleeping Lady (Mount Susitna is its formal name) and the Alaska Range beyond. It is a constant reminder of just how beautiful Alaska is and why it is a tourist mecca.

The view from the other side of Anchorage is of the Chugach Mountain Range, which is also beautiful but doesn’t for the most part include a large water body. I’m excluding those folks who have a view of both the Chugach Mountains and Turnagain Arm, which can also be pretty spectacular.

A great many visitors reach Southcentral Alaska via cruise ships that unload them in Southeast Alaska ports. And the cruise ships won’t be able to resume their operations until Canada reopens its ports. Right now our neighbor to the east has shut down all access because of the Covid plague, but that threat will presumably fade within a few months and the border will reopen.

Cruise ship travel to Alaska is limited by the Jones Act, which requires that foreign-built vessels traveling between two U.S. ports make a stop in a foreign port. The act was passed in 1920 to encourage construction of vessels in American shipyards.

Very few cruise ships have been built in American shipyards as a result of the law, but it certainly has created a hassle for vessel traffic to Alaska. The cruise ships moving from Seattle to an Alaska port, for instance, must make a stop in Canada. And the problem with that right now is that Canada has closed its ports and border crossings in an attempt to limit the spread of Covid.

It may be a dim hope, I admit, but it certainly would be nice if the Jones Act could be modified to allow cruise ships to move between American ports without stopping in a foreign port.

The act doesn’t seem to be meeting its purpose. Most cruise ships and other large vessels are built in South Korea, China and Germany. The last sizable ships built in American shipyards were launched in the 1950s.

It certainly would be nice if Congress took a look at whether the Jones Act is serving the purpose it was designed for these days. If not, please get rid of it or at least tweak it to solve the Alaska problem.

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