With less than two weeks remaining in this year’s session, the Legislature is finally getting down to brass tacks. Perplexingly, the body in control of Alaska’s purse strings opted to largely focus on one side of the balance sheet, eschewing meaningful discussion of revenue measures until after the state budget had been passed. And while it’s better that legislators act on state revenue late than not at all, it’s hard to envision the group giving such issues the focus and vetting they need in the time remaining — and, unless they are able to show the public that everyone is contributing to a budget solution, it will be hard to see them having support for any path they choose.
It’s not as though legislators didn’t have time or opportunity to research the available options to help balance the budget. The situation that exists now is near-identical to the state’s situation last year. Then, the Legislature opted to focus solely on cutting the budget rather than address revenue measures. This session, the story was almost the same, with little discussion of revenue bills taking place until the past few days. And it wasn’t for lack of ideas to talk about. Gov. Bill Walker’s administration spent last summer engaging Alaskans on potential solutions to the budget crisis and at least two major pieces of legislation, by the governor and Sen. Lesil McGuire, were filed before this year’s session started. Both would alter inflows and outflows of the Alaska Permanent Fund’s earnings reserve in order to help provide a more stable flow of income to state government.
In addition, several other revenue bills have been proposed, though they have yet to see much discussion. Rep. Paul Seaton’s HB 365 would establish both a restructuring of the earnings reserve, a cap on the amount of permanent fund dividends and a state income tax, while Rep. Kurt Olson has proposed a 35 percent tax on dividends themselves in an effort to raise money for state coffers. The notion that we all must make sacrifices to continue funding the services government provides has been slow to gain traction in Juneau, but is gathering steam as other methods of balancing the budget — spending cuts and a hoped-for oil price rebound — are clearly not enough to address the issue on their own.
While it’s good to see legislators addressing the budget scenario in a more holistic manner, the public’s willingness to embrace whatever revenue measures are deemed necessary is endangered by other budgetary stances the Legislature is taking. Specifically, the softening of Gov. Walker’s proposed cuts to oil tax credits will make a hard sell of other measures, as the public may see the legislators as trying to raise revenue from the public for the benefit of North Slope producers. At a time like this, no one — industry or citizenry alike — should be seen as getting a free pass from the shared revenue hardship.
Additionally, decisions such as the Legislative Council’s offer of $32.5 million to purchase the widely unpopular Anchorage Legislative Information Office make it appear to the public that the Legislature is perfectly willing to spend money when they stand to benefit. This is especially the case as other crucial capital priorities, such as the University of Alaska Fairbanks’ half-finished engineering building, have scant support despite their obvious potential benefits. It doesn’t help that the price tag to finish the engineering building, estimated at $34.8 million, is so similar to the purchase offer for the Anchorage LIO.
A fiscal solution that charts a path to a balanced budget for Alaska may require a special session given how little time is left to debate revenue measures. But the Legislature should push to chart that path, for the good of Alaska’s future. In doing so, they should take care to ensure they don’t make the mistake of asking the public to bear the financial burden of government while holding others harmless — whether industry, themselves or any other group.
— Fairbanks Daily News-Miner,