Baxter: Moving forward toward a balanced budget

  • By Keith Baxter
  • Tuesday, August 9, 2016 6:08pm
  • Opinion

As a lifelong local, I feel truly blessed to have lived my entire life in Alaska. While it can be easy to take the quality of life enjoyed here for granted, I have always looked for ways to give back and to help preserve the strength of our social fabric.

I am seeking to represent House District 30 because it is the most effective way that I can continue to serve our community. We need a culture shift in Juneau. The days of fighting over oil revenue for pet projects are gone. Our state needs legislators that are taking a realistic look at the next 30 years, not waiting for a return of Prudhoe Bay glory days to solve our problems for us.

As we enter our fifth consecutive year of deficit spending, it should come as no surprise that a balanced state budget is my top priority and the primary reason I am running for office this year. Balancing the budget is not an option. State spending must be reduced. We have relied on reserves to prop up spending and avoid passing a fiscal plan for too long. Today we are drawing dangerously close to eliminating state reserves completely and the longer we wait to take action, the fewer solutions remain.

AK LNG is a bright spot on the horizon, but, that revenue is at least a decade out. Given the current balance of our savings, waiting for LNG taxes and royalties to balance the budget is not an option. Passing a plan to address the budget deficit must happen during the first session of the 30th legislature. I am committed to working with the other members of the House, not only to pass a fiscal plan, but to do it within the voter-mandated 90 day session length.

While budget cuts are mandatory, which should go without saying, new revenue will also be required as part of any comprehensive fiscal plan. My approach to discussions on revenue will be to start with all options on the proverbial table and to continue to listen to the direction of District 30 residents.

While there is no way to know the final shape of the plan that will gain enough support to ultimately be passed, I am realistic about the fact that no plan is perfect. No matter the details, we are going to pay more and receive less when it comes to state services. You don’t balance a deficit of more than $3 Billion any other way.

Each of the tools in our fiscal toolbox has its own set of advantages and disadvantages. While a state sales tax helps us realize a better return from our prospering visitor industry and ensures that everyone contributes to a balanced budget, it disproportionately affects rural and low income Alaskans, and is disruptive to local governments who already utilize sales tax to cover the expense of services at the local level. On the other hand, a state income tax pulls in revenue from out-of-state workers, but it comes at an increased expense to the most productive individuals in our economy.

After more than three decades without a broad based tax in our state, tax is a four letter word for many Alaskans. However, as unpalatable as these revenue options may seem, the hard truth is that even if Representative Seaton’s income tax proposal and Governor Walker’s sales tax proposal were both already in place, projections indicate that we still would have a budget deficit of more than $2 Billion. This is why further cuts, and at least provisional use of the Earning Reserve, are so vital to any path forward.

While the corpus of the Permanent Fund remains sacrosanct, the legislature can – and soon will – spend money from the Earnings Reserve to pay for state services, with or without a comprehensive plan. Without a plan there will be less discipline in how money is spent and we will simply hemorrhage money from the Earning Reserve to pay for state spending until it is bled dry like the Constitutional Budget Reserve and the Statutory Budget Reserve before it.

I only support the use of our investment earnings in conjunction with reductions in spending and mandatory review or sunset dates built in to the process.

As we all know, paying bills is never fun, but it must be done. We, as a state, must continue to meet our financial obligations and remain solvent. With your help, I am committed to that end.

Keith Baxter is a Republican candidate for the Alaska House of Representatives in District 30.

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