Just about a month from now, the Legislature will convene in Juneau. Legislators hopefully will have had the time to digest Gov. Bill Walker’s proposed budget, unveiled Thursday, and will be prepared to find solutions to Alaska’s fiscal crisis.
We are at this point optimistic that a new mix of lawmakers will come to agreement because, quite frankly, we can’t afford the alternative.
During the past year’s marathon legislative session that seemed to bleed right into the campaign season, the state’s financial situation has been made clear: with the drop in the price of oil, state revenue no longer covers state expenses, with a deficit in the neighborhood of $3 billion. For the past two years, the state has been drawing from its savings accounts, primarily the Constitutional Budget Reserve, to cover the gap. Living off our savings is unsustainable, and as Sen. Peter Micciche (R-Soldotna) noted in remarks to the Kenai and Soldotna Chambers of Commerce earlier this week, Alaska will run out of money in the next year or so if the Legislature does not act to significantly close the gap.
As part of his budget plan, Gov. Walker will re-introduce the version of the Permanent Fund Protection Act that passed the Senate last session. According to the governor’s office, the bill creates a formula for a draw from the Permanent Fund’s Earnings Reserve Account to pay for government services. Gov. Walker’s budget also includes additional cuts to state government and a motor fuels tax, with the possibility of additional new revenue measures introduced after discussions with legislators — the all-of-the-above approach required to close a gap of $3 billion.
Our central Kenai Peninsula legislators appear focused on the budget issue heading into the session. Sen. Micciche, who will take on a leadership role as Senate Majority Leader, said his goal is to steer that body toward a long-term solution. Reps. Mike Chenault (R-Nikiski) and Gary Knopp (R-Kenai) will find themselves in the minority in the House, but with 18 members, one that should still wield significant clout.
The new House majority caucus, which includes Rep. Paul Seaton (R-Homer) as Finance Committee Co-Chair, has expressed similar goals in addressing the budget deficit with a combination of cuts and new revenue.
We know there will be disagreement on just what the best balance of spending reductions, taxes and use of Permanent Fund earnings might be — in fact, we hope those issues are rigorously debated when lawmakers gavel in on Jan. 17.
But we also know that without a resolution by the end of the session, Alaska faces dire consequences. There is no more road down which we can kick the can. Alaska’s lawmakers know this, and we’re optimistic that the Legislature will stay focused on solutions in the coming months.