Budget talks come to Kenai

Many Alaskans are talking about Permanent Fund Dividends this week, whether they are rushing to file by the Thursday deadline or debating Gov. Bill Walker’s proposal to use them to help balance the state’s budget.

The Legislature is deep in discussions about the final state budget, now that both the House and Senate have passed their individual budget plans. The next step is to make decisions about how to fill the gap in the unrestricted general fund left from receding oil prices.

Many of those discussions have proven divisive among Alaskans, especially those surrounding the use of Permanent Fund earnings. The Rasmuson Foundation, a nonprofit that provides community grants across the state, polled Alaskans statewide for their opinions about solutions to the budget crisis.

Diane Kaplan, the president and CEO of the Rasmuson Foundation, presented the poll results to Kenai Peninsula residents Friday during a town hall meeting. She said the foundation has focused on an educational campaign on the budget crisis for the last year.

“We are concerned in the current circumstances, if the Legislature does not act this year, everything we’ve worked to achieve in 60 years could be undone overnight,” Kaplan said.

The Rasmuson Foundation began an educational campaign in May 2015, when the scope of the fiscal crisis was becoming clear, to reach more Alaskans with information. Kaplan said more Alaskans are aware that there is a problem, but clear ideas about solutions remain elusive.

Of the more than 800 Alaskans that Rasmuson polled in January, 65 percent said they preferred that the legislators use a mixture of budget cuts and new revenue to plug the budget hole. Respondents seem to favor a sales tax slightly more than an income tax as well, with some preferring both.

Though most Alaskans expressed support for using both budget cuts and new revenue, the sources of that new revenue are still murky. Support among respondents eroded as soon as the ideas of capping the Permanent Fund Dividend and levying a personal income tax were introduced, Kaplan said.

“This is the challenge your elected officials have,”
Kaplan said. “On the one hand, people say, ‘Don’t slash and burn the budget,’ and on the other hand, they say, ‘Don’t touch my dividend and I don’t want to pay taxes.’”

At the event in Kenai, held Friday at the Challenger Learning Center, there was considerable discussion about where to cut and future plans for funding beyond the the immediate crisis. Sen. Peter Micciche, who represents the Central Kenai Peninsula, said a problem with Walker’s budget is that it fills the budget gap for now but does not account for the idea that oil prices may not rebound for some time.

The Legislature has cut approximately 40 percent of the budget at this point, Micciche said. The cuts are now getting into areas such as education and social services, where it is harder to decide which services to reduce.

The call for additional cuts is still relevant, but the idea of cutting an additional billion dollars from the budget this year will not be possible, he said.

“Cutting a billion dollars this year is mathematically and politically impossible,” Micciche said. “As you look at these departments and you shave them down, there’s still plenty of room to cut — it just takes time. It takes more time for the efficiencies and things.”

Kaplan said that since the budget cuts began, approximately 560 state employees have been laid off, and combined with the cuts from the University of Alaska and the railroad, the total comes to approximately 1,000 people.

The use of the Permanent Fund earnings is already an option for the Legislature, without permission from the public. The Legislature has never done so, but the state government will have no choice but to use the Permanent Fund in a few years if nothing is done, said Kenai Peninsula Borough Mayor Mike Navarre, who also spoke at the meeting.

“There is enough money in reserves to fund whatever is in the legislature’s budget … I think the piece that needs to be done this year is repurposing our financial assets, meaning earnings of the Permanent Fund,” Navarre said.

The Rasmuson Foundation built a model online, similar to the one released by the state last September, which allows individuals to play with the options to balance the state budget with both cuts and new revenue. Once a person finishes his or her model by balancing the budget, they can send it directly to legislators or the governor as their idea for how to solve the fiscal crisis.

Kaplan urged members of the public to try the model, called Plan 4 Alaska. One of the challenges with budget cuts was that while respondents to Rasmuson’s survey favored more budget cuts, when asked where to cut, approximately 41 percent said they had no idea, Kaplan said.

“That’s something to think about– it’s very tough on the legislators when you say ‘I want you to cut,’ but when they ask … you say, ‘I don’t know,’” Kaplan said. “We’re very disconnected from this budget because for the most part, we’re not paying for it right now.”

Reach Elizabeth Earl at elizabeth.earl@peninsulaclarion.com.

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