Voices of Alaska: It’s time to accept the governor’s compromise

  • By Tony Knowles
  • Wednesday, June 14, 2017 1:42pm
  • Opinion

It’s time to accept the Governor’s compromise.

We must end the standoff in Juneau because the option of doing nothing is devastating to Alaska, and delivers a crippling blow to our fragile economy. Another year of stalemate would deplete our reserves and would fail to reverse our slide into recession.

The Walker administration outlined the potential impacts of a shutdown of state government on Thursday. The specter they painted is grim: Closed commercial and sports fisheries, ferries parked, no driver’s licenses, death certificates or marriage licenses and the list goes on.

After calling the Legislature into special session, the Governor proposed a compromise to break the Legislative deadlock. The compromise is a masterful blend of all of the ideas and positions currently on the table from the Governor, the Senate, and the House. It is less than perfect and has plenty to make everyone “equally unhappy.” That said, it is a bold and significant step in creating a long-term sustainable budget that, while at a substantially reduced size, provides essential services, invests in education, and encourages business investments and jobs.

A complete plan would have included a budget that does not reduce any savings account. This compromise likely falls short of that by about $300 million but that is a far cry from the $3.5 billion dollar deficit a year ago. An 85 percent accomplishment of a historical change in our state financial framework is a victory in good governance and a legacy for future Alaskans.

The components of the compromise begin with a reduced budget. When the oil revenues tumbled in 2013 the budget was almost $8 billion. The new budget under this compromise would be close to 5.5 billion, almost a one-third reduction in State spending. Second, using some of the earnings of the Permanent Fund, and the Reserve and the CBR would produce approximately $2 billion to reduce the deficit and still pay a $1000 dividend to every Alaskan and inflation proof the principal. A fuel tax increase of 8 cents per gallon this year and then 8 cents the following year, making Alaska still one of the lowest fuel taxes in the nation, would produce $80 million a year new revenue intended for highway maintenance. Next a broad based progressive education head tax on both residents and non-residents would produce approximately $100 million in new revenues, which would be intended in this and future years to be spent only on education. The elimination of cashable oil tax credits reduces expenditures by another $1.2 billion over the next 10 years.

The net effect would reduce the FY 18 deficit from more than $2.5 billion to approximately $300 million. It would provide the continuation of vital public services. It would help maintain our bond rating, which is at serious risk. And it would maintain the Constitutional Budget Reserve at a prudent level. In short, it would solve 85 percent of our budget crisis and set the stage for the next Legislature to fine tune our fiscal framework and produce a truly balanced budget.

In the spirited debate over the last two legislative sessions on the purposes of a fiscal plan there have been passionate advocates for many principles: ensuring that the sacrifices include all stakeholders from individual residents to oil companies, substantially reducing the level of State spending, establishing a fundamental fairness in who pays for additional revenues, in cutting the budget we do not put the burden on most vulnerable or on the educational investment in the next generations, and that we must protect our savings as they are the sources of a sustainable budget.

The Governor has included all of these values in his compromise. The amount and the balance may fall short and not satisfy each advocacy. But please let their idea of perfection of our new fiscal reality be the continuing agenda for future legislative deliberations and actions. It must not be the basis for a continued gridlock, calling it quits, and falling off the fiscal cliff.

No other state in the nation has the opportunity to permanently fund almost 40 percent of its budget with earnings from its savings. By taking this giant step forward toward fiscal stability Alaska can turn the corner, attract investment, rebuild its economic foundation and pass on a legacy of opportunity and prosperity.

It’s time to complete the people’s business in Juneau, to be responsible and to put the long-term interest of Alaska first.

Jim Jansen is Chairman of the Lynden Companies. Marc Langland is the retired Chairman and CEO of Northrim Bank. Tony Knowles is a former Governor of Alaska.

More in Opinion

U.S. Senate candidate Kelly Tshibaka and former President Donald Trump stand on stage during a July 2022 rally in Anchorage. (Mark Sabbatini / Juneau Empire File)
Opinion: Tshibaka’s insincere defense of democracy

There are a lot of possible explanations why fewer votes were cast last November

Capitol
Opinion: Humanism and the billionaire class

Compromise is the right thing to do and they should do it.

tt
Opinion: The challenged truths of 3 elected representatives

“Politicians lying is nothing new.”

This photo shows the Mendenhall Glacier Visitor Center. (Ben Hohenstatt / Juneau Empire File)
Opinion: The wrong way to define demand

And as glaciers go, the Mendenhall is only a minor attraction.

Zachary Hamilton (Courtesy photo)
Borough mayoral candidate: ‘The best is yet to come’

Zachary Hamilton is running for Kenai Peninsula Borough mayor in the special election

Love, INC in Soldotna, Alaska, provides homelessness prevention and housing services to people on the Kenai Peninsula. (Photo by Brian Mazurek/Peninsula Clarion)
Opinion: COVID relief funds help homeless children in Alaska

We need to sustain this kind of investment.

Gov. Mike Dunleavy holds a press conference at the Capitol on Tuesday, April 9, 2019. (Juneau Empire file photo)
Opinion: Alaska must act now to capitalize on carbon markets

Alaska has vast forests and coastlines that can provide natural carbon management

1
Opinion: MLK Day clinics offered in the ‘spirit of service and advocacy for equality and social justice’

Attorneys across the state will be spending their holiday as “A Day On, Not a Day Off”

The M/V Tustumena comes into Homer after spending the day in Seldovia in 2010. (Homer News File)
Opinion: New federal funding could aid Alaska Marine Highway System

The evidence is clear that the AMHS is in grave danger of failing and moving into Alaska’s history books

(Mark Sabbatini / Juneau Empire File)
Opinion: I’ve seen the union difference

As a community we can show solidarity…

(Peter Segall / Juneau Empire File)
Sullivan’s irrelevance in defense of democracy

Two years ago this week, supporters of then-President Donald Trump stormed the U.S. Capitol…

People vote in polling booths at the Soldotna Regional Sports Complex on Tuesday, Nov. 8, 2022, in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Voices of the Peninsula: What’s on your 2023 schedule so far?

There is a Kenai Peninsula Borough Special Mayoral Election coming up in February