No room for error in Alaska special legislative session’

  • Tuesday, May 24, 2016 9:42am
  • Opinion

After a frustrating regular session, extended session and two special sessions last year in which legislators reduced the state budget but didn’t pass or even meaningfully debate revenue measures that would put the state on a path to fiscal sustainability, the lawmakers returned to the state capital in January to try again. With multiple revenue restructuring proposals from Gov. Bill Walker, Sen. Lesil McGuire and Rep. Paul Seaton to debate, there was no shortage of road maps to follow away from the state’s ballooning $4 billion deficit.

Still, no real revenue action was taken as the group passed its 90-day voter-mandated end of session. No real revenue action was taken before the Legislature had to gavel out at 121 days as required by the Alaska Constitution.

On Monday, the Legislature will begin its special session. And if its members can’t address the revenue problem this time around, the consequences for the state will be disastrous.

For the state to remain on a solvent financial path, a few things must happen during the next 30 days. Here they are.

1. Restructure permanent fund earnings. The Legislature has been plenty happy to champion cuts as a solution to the state’s fiscal woes, ignoring the fact that cuts can’t come anywhere close to bridging the revenue gap. The only solution that comes anywhere close — providing more than $1 billion in revenue to the state each year, no matter whose framework is selected — is a restructuring of permanent fund earnings to provide a source of stable revenue for the state while protecting the Alaska Permanent Fund nest egg.

Will this mean dividends to residents will be diminished? Yes. But it will also preserve the dividends for coming generations, whereas the Legislature’s tack of spending from savings and ignoring the need for revenue measures will mean the depletion of the account that pays for dividends in just a few years, at which point the dividend will vanish, likely forever.

Legislators looking to score political points have attacked those pointing out the need for permanent fund earnings restructuring. A particular target has been GCI CEO Ron Duncan, who has been drumming up business and public support for revenue measures with his group Alaska’s Future. They characterized Mr. Duncan’s warning that he couldn’t continue spending on new projects and infrastructure if the state doesn’t fix its revenue problem as a threat. Those statements were not threats, they were acknowledgments of reality. Every business in a similar position across the state is contemplating what the future holds. Ratings agencies have already cut the state bond rating in response to the situation; last week, as the Legislature again failed to act, Standard and Poors sounded another warning that further downgrades will likely come if the state keeps spending from savings without a fiscal plan. Permanent fund earnings restructuring must be put into effect now.

2. Revamp oil tax credits. This is where the Legislature is currently at an impasse. Dueling versions of HB 247, which would pull back on some of the state’s generous credits to oil producers, have the House and Senate at loggerheads. The Legislature must pass a version of the bill that substantially reduces the amount paid to oil companies, or residents will be furious that revenue measures appear to be taking money from Alaskans’ pockets and giving them to producers that, in many cases, are already making substantial profits.

3. Pass the budget. For the second year in a row, the state is in danger of a government shutdown, the effects of which would be calamitous. Ferries would shut down in the middle of the tourist season. Thousands of Alaskans would be without a source of income. Road maintenance projects needing to be completed in the short summer would be put on hold.

What’s more, failure to pass a budget would signal to the rest of the world that Alaska’s government is no longer functional. Bond ratings would suffer immediate downgrades. The economic consequences would resonate for years.

There are other measures that should have seen passage this year during the regular and extended session, but the reality of Alaska’s situation is that the three major items detailed here are likely the best residents can hope for. Owing to legislators’ intransigence and the pace at which work is done in Juneau, even these three may be a stretch. But they must happen and they must happen now. The state cannot afford delay, and Alaskans should remind lawmakers of the consequences of failure to address these serious issues.

— Fairbanks Daily News-Miner

More in Opinion

Gavel (Courtesy photo)
Opinion: The foolish men claiming self-defense

It’s not just misguided teenagers carrying guns who find themselves in trouble with the law.

Opinion: State defends its right to cut nonexistent taxes

This from a state that has no property tax on homes or businesses, only on the oil industry.

Dr. Jay Butler, former chief medical officer for the State of Alaska, is seen in this undated photo. (Courtesy photo)
Alaska Voices: Feeling grateful this Thanksgiving for the COVID vaccines

The COVID vaccines remain our strongest tool in combating the pandemic and helping us return to our lives and the things we love and cherish.

A resident casts their vote in the regular municipal election Tuesday, Oct. 6, 2020 at the Kenai Peninsula Fairgrounds in Ninilchik, Alaska. (Photo by Megan Pacer/Homer News)
Voices of the Peninsula: All votes matter

In the beginning, only property-holding white men could vote.

Cristen San Roman. (Photo provided)
Point of View: Is management of Cook Inlet catered to special interest groups?

If these fish are so at risk, why is BOEM able to move forward with lease sale 258?

Homer Foundation
Point of View: Grateful for the hidden ‘good’

Gratitude: Noun The state of being grateful; thankfulness. The state or quality… Continue reading

Homer High School Principal Douglas Waclawski. (Photo provided)
Point of View: What is Homer High School about?

What I consider Homer High’s strength is that we are a place for learning.

UAA Chancellor Sean Parnell. (courtesy photo)
Alaska Voices: Invent your future at UAA

At UAA we’re providing the tools to help students of all ages and skills chart a new course forward.

A registered nurse prepares a COVID-19 vaccine at the pop-up clinic on the Spit on May 27. (Photo by Sarah Knapp/Homer News)
Alaska Voices: Vaccination is the still best protection from COVID-19

The Alaska State Medical Association encourages you to protect yourselves and your community from preventable illness by getting recommended vaccines.

(Ben Hohenstatt / Juneau Empire File)
The sad diminishment of Rep. Don Young

Young seems afraid to demand his party leader defend the dignity of the institution he loves.

A “Vote Here” sign is seen at the City of Kenai building on Monday, Sept. 21, 2020, in Kenai, Alaska. (Clarion file)
Alaska Voices: Restore our strong campaign donation limits

Without campaign spending limits, the ideal of one person, one vote is no longer really true.

The Final Redistricting Map approved for the Anchorage and Matanuska-Susitna area is seen on Nov. 9, 2021. (Map via
Alaska Voices: The Alaska Redistricting Board’s last-minute gerrymandering failed Alaska

Our Constitution outlines rules for a redistricting process designed to uphold public trust.