Stevens: Election year poses challenges for fiscal plan

It’s going to be a long five months.

Before Sen. Gary Stevens, R-Kodiak, starts packing for the trip to Juneau after the New Year, he stopped by Homer Dec. 17 to meet with Senate District P constituents. Stevens visited the Homer Courthouse and the Homer Senior Center, spoke at the Kachemak Bay Rotary Club noon luncheon, and held an open house at the Homer Legislative Information Office.

One main issue will dominate discussions in the second regular session of the 29th Alaska Legislature: the budget. That’s the Legislature’s only real job, Stevens said at his Rotary talk. What budget it passes and how the Legislature deals with Alaska’s fiscal crisis is an open question.

Stevens said he thought the Legislature would go into double-overtime, with at least two special sessions extending its stay in Juneau beyond the 90-day limit for two more months.

“It’s going to be a bad year,” Stevens said.

In the 16 years he’s served, it had been a lot more fun when the state had money and legislators could respond to local governments’ capital requests.

“It’s fine when you’ve got lots of money,” Stevens said. “Things have changed considerably. It’s hard, hard times.”

Stevens praised Gov. Bill Walker for his willingness to address a fiscal gap of about $3.5 billion.

Walker has proposed a combination of budget cuts, an income tax, a cap on Permanent Fund Dividends and a restructuring of how Permanent Fund earnings get used.

“He’s taking this very seriously,” Stevens said of Walker. “I think the governor has given very good leadership to the state.”

Ideas like an income tax aren’t likely to pass in the next Legislature, not with newer legislators running for re-election, Stevens said.

“If you throw me out of office because I voted for an income tax, that doesn’t bother me,” he said. “That’s where we have to go. We have to find some revenues to run the state.”

The Legislature can’t put off forever addressing the fiscal gap. If nothing is done this year, the state can dip into savings set aside when the price of oil was high.

“We have a couple of years of savings. The sky is not falling,” Stevens said. “After that, without savings, we’re going to be in a hard place.”

Some legislators want to make deeper budget cuts beyond the governor’s proposed cuts of $100 million. Walker cut $900 million last year, but a lot of that was capital projects. Another proposal is to close schools with fewer than 25 students, 15 more than the current 10-student minimum. That’s a bad idea, Stevens said. Even if schools close, the students will still be there, and they can’t learn from a computer program.

“If a kid is failing in front of a teacher, how is he going to do better with a computer?” Stevens asked.

Why some Alaska students do poorly isn’t an issue of living in rural areas. It’s a matter of poverty, Stevens said.

“Poor kids in our villages do really, really badly on tests and graduating from high school, just like poor kids in Anchorage,” he said.

Stevens praised Walker for not making deep cuts for education in his proposed 2016 budget. Walker is cutting funding for early childhood education, however.

Other legislators have proposed mothballing some ships in the Alaska Marine Highway Systems.

“We’ve never talked about mothballing some highways in the interior,” Stevens said. “Maybe we should talk about that.”

While the governor’s budget does cut the University of Alaska, that doesn’t mean the Kachemak Bay Campus will close, Stevens said. Stevens said UA President Jim Johnsen won’t do anything so Draconian.

“I think President Johnsen will be very supportive of finding a way to get things done economically,” Stevens said. “They’re not going to close the university here. It’s been a successful campus.”

The Legislature should be cautious in how it addresses the fiscal gap, Stevens said. He mentioned discussions with Pat Pitney, Walker’s budget director, and her concerns if cuts go beyond 2.5 percent.

“It could have a real detrimental impact on the economy. Her thought was it could lead us into a recession,” Stevens said.

At the same time, not addressing the fiscal crisis could have other economic effects. In response to this reporter’s question about what happens to state bond ratings if nothing is done, Steven said, “That’s a real threat. It’s important. We want to keep the cost of bonding low in the state. We’ll watch that.”

Discussions about how to use the Permanent Fund to balance the budget also will be a big topic. The principal can’t be touched without amending the constitution, but how the state uses earnings can be changed with a vote of the Legislature.

“We have the Permanent Fund … It might have to be used,” Stevens said. “Be prepared to have a long discussion on what we can do and how we can help out.”

Solving Alaska’s problem will require leading from the middle, Steven said. He described himself as a moderate Republican who hasn’t gotten much support from the state party. He said he heard from somebody from Homer who got a call about who can run against him from the far-right wing of the party.

“I said, ‘Bring it on,’” Stevens said. “I think the far left and far right have put themselves in a position where they’re no longer in a decision-making position.”

As he goes into the next session, Steven repeated that it’s going to be hard.

“I hope we have enough strength to do the right thing,” he said.

The second regular session of the 29th Legislature runs Jan. 19-April 17, 2016.

Michael Armstrong can be reached at michael.armstrong@homernews.com.

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