It has been eight years — spanning three governors and four legislatures — since Alaska has balanced its budget: FY14 and FY15 (Parnell); FY16, FY17, FY18 and FY19 (Walker); FY20 and FY21 (Dunleavy). Over those eight years we have drawn over $16 billion from our savings to cover shortfalls.
During this period, these governors/legislatures have reduced our General Fund Budget by approximately $3.5 billion. Yet, even after all these cuts, Gov. Mike Dunleavy and the 32nd Legislature are expected to face more than a $2 billion deficit this year (assuming the governor’s expected PFD).
This history demonstrates that our challenges go beyond political parties and legislative majorities: Alaska lacks a stable fiscal plan. Regardless of where you fall on the political spectrum, after eight years, we now know that Alaska cannot balance its budget without a broad solution that includes both an appropriately sized government as well as increased revenues.
Those who support Ballot Measure 1 argue that oil severance taxes should be increased. (Based on historical averages, I tend to agree). Nevertheless, according to ISER, while acknowledging that Ballot Measure 1 will add some revenue, it is not a stand-alone solution to our budget challenges.
For many of us who oppose Ballot Measure 1, the question is not merely whether oil companies are paying an appropriate severance tax on oil production. Rather, the question is whether we can address taxes through a political process that builds confidence in Alaska within the investment and business community.
If we want to grow our economy, how we adopt change is as important as the change we make.
Throughout our history, every time Alaska faces a budget gap the issue of oil taxes seems to be put on the table. Legislation is proposed and debated. Each side has its grievances: proponents believe that oil industry influence distorts the political process, while industry argues that it is unfairly singled out. (The oil industry has funded over 80% of our business tax revenue).
This pattern does not create a long-term stable investment environment, and it does not create confidence in our business partners.
I oppose Ballot Measure 1 for two reasons:
First, since a stable fiscal environment will require a balance of revenue sources, we are not keeping faith with the oil industry by taxing them and not addressing other funding sources, particularly a broad-based tax. A comprehensive fiscal plan — including an appropriate-sized government and a balance of revenue sources — will go a long way to create confidence in the investment community because it both solves the fiscal problem and demonstrates a growing state maturity as we Alaskans are willing to grapple with the hard issues and solve our problems.
Second, striking the right balance will be difficult and complex, and is not well-suited for a ballot measure. It will require careful analysis from the experts. It needs time and deliberation.
This is why I will vote “no” on Ballot Measure 1, while at the same time urging my legislators to pass a sustainable fiscal plan by continuing to constrain government spending, enacting appropriate oil severance taxes, and reenacting broad-based taxes.
I also urge the oil industry to be an active and constructive participant in the process.
I invite you to join me in voting “no” on Ballot Measure 1.
Sheldon Fisher served as Gov. Bill Walker’s Department of Revenue commissioner from 2017-2018.
• By Sheldon Fisher