The first snows of the season have just fallen, and the Alaska Legislature will be convening in special session in eight days.
It’s absurd to think that it has been a full 10 months since our 60 lawmakers first gathered for the year and that Alaskans remain without an agreed-upon package of steps to straighten out the state’s finances.
The session that begins Oct. 23 will be the fourth of the year. And, again, it will be devoted in part to considering yet another proposal to help close the state’s expected multi-billion revenue shortfall for the next fiscal year.
The revenue picture is grim. Alaska needs a multi-component package to close the persistent gap, but legislators didn’t deliver one earlier for the current fiscal year, which has a projected gap of $2.6 billion. So the state will be using a large chunk from its savings accounts.
But those savings accounts will have a short lifespan at such a rate of drawdown.
Alaska needs some fundamental changes to stay afloat.
The House and Senate each approved legislation to use a portion of the earnings of the Alaska Permanent Fund to help pay the cost of government, but the differences between the versions of each chamber have yet to be worked out. The bill by the Democrat-led House coalition was conditioned on approval of an income tax, something the Republican- led Senate opposes.
How about cutting our way out of the problem? Alaskans need to understand that cuts alone won’t come close to getting the state out of this mess.
Additional revenue is needed. Use of money from the permanent fund’s earnings reserve account is by far the largest pot available, but it alone won’t close the gap. The problem exists in finding agreement on where to get the rest of the revenue.
Gov. Bill Walker must be as frustrated as anyone at the lack of a fiscal solution. He has been presenting ideas and watching the leaves on the trees turn from green to yellow and then float to the chilly ground.
The governor has been generally driving the process since taking office in 2014. He first did it publicly, pressuring the Legislature. That didn’t produce results. He then eased off, hoping the Legislature would see the seriousness of the financial problem and act accordingly to fix it. That didn’t work, either.
So here we are, 10 months since the start of the 2017 regular legislative session and just about three years into Gov. Walker’s term. And Alaska remains without a comprehensive fiscal plan to handle the projected multi-billion dollar deficits of the years ahead.
Gov. Walker pointed out in his proclamation calling the Legislature into special session later this month, as he has previously, that he and legislators have reduced state spending 29 percent, or $1.7 billion, since 2014.
The quest to reduce state spending is a never-ending one. There’s nothing wrong with that. But there comes a point where cutting cannot be the pre-eminent approach. Alaska is well beyond the point where looking for reductions should be the first step.
The special session begins Oct. 23. The one revenue item on the agenda is yet another proposal from the governor: an income tax of 1.5 percent on Alaskans and non-resident workers. The tax would be limited to the higher of $2,200 or twice the previous year’s permanent fund dividend amount and would raise an estimated $325 million annually, still not quite enough to fill the hole even with the use of the permanent fund earnings, according to the governor’s budget director.
Gov. Walker has shown strong leadership in a difficult time. He came into office with oil prices tumbling and oil production down, two developments that sent the state’s oil-reliant revenue stream into rapid decline.
Time is running out on Alaska. Legislators should have solved the problem long ago.
If this group of 20 Senate members and 40 House members can’t get it done, then perhaps a new group should be given the opportunity next November.
Let your legislators know that they need to solve the fiscal crisis now.
— Fairbanks Daily News-Miner,
Oct. 15
