June 19, 2017
Monday PM

I'm not surprised that at day 154 of the 2017 legislature, my inbox is stuffed with messages from Alaskans asking what is going on, asking for a budget, asking for a fiscal plan, decrying or begging for income taxes, opposing cuts to education, etc. Here is the essence of my response to folks.

I think I can assure you definitively that no one wants a state shutdown and the conflict is really about more than a budget. It is about a fiscal plan which allows for future reasonable budgets. Here in very broad strokes are the factors:

Spending: There are different visions about the kind of state we want to live in. Some would cut services until we are "living within our means," in what I think of as a mean state. We see that translated into inadequate funding for the Pioneer Homes, in cuts to services for those with disabilities, in unsafe caseloads for child protection workers, in dramatic cuts to education and our university system, in loss of state troopers, decaying services across the board.  Others insist on retaining these quality of life functions at adequate levels.

Revenue: Some believe we should live off state savings accounts, draining the Constitutional Budget Reserve (CBR) and using the Earnings Reserve of the Permanent Fund (ERA), which will reduce dividends. Others believe that we need to also have new revenue coming from some combination of an appropriate share of oil profits, and income tax or sales tax.

While there are exceptions, generally the Republicans want to reduce government services and use savings to sustain ourselves. They argue that the state has a lot of money (Permanent Fund?) and does not need to take money from individual Alaskans or from industry. The problem with this option is that it hurts low income folks disproportionately, sustains and deepens the recession, and inhibits investment. And it does take money from individual Alaskans – all of them.

“Generally, the Democrats want to retain services (especially education), protect the dividend because it is crucial to so many people and to the economy, and are willing to help support state government through payment of taxes, just as every other state in the nation does. We recognize that the ERA has a role in funding government but we support its use only as part of a balanced plan.

What looks like brinkmanship is actually this struggle, and the concern that we have had the same fight for 3 years now. It is well beyond time to have a real fiscal plan, reducing our reliance of the price of oil, and giving us a stable revenue stream to support state services and capital budgets that meet our needs, without which we will inevitably be in the same painful struggle next year, and the next, and the next....with fewer options each time.

So, what happens next?  Well, the first goal is to pass an operating budget to avoid a state shutdown on July 1st.  This, by itself, is not too much of a problem since no one wants to be responsible for shutting down the state. 
 
The problem is that the Senate wants only to cut the budget and then rely on the Permanent Fund Earnings account to fill the gap between spending and the income, accepting the inevitable consequence of reducing dividends, effectively flat-taxing every single Alaskan without adjusting the state’s unaffordable subsidies to oil companies, or instituting an income tax under which those who can afford to, and the 21% of Alaska's workers who do not live here, will contribute to supporting state services.  The only lever the House has to "persuade" the Senate to support new revenue is to hold on to the budget.  If the House gives the Senate a budget they agree with, it is game over - no new revenue, continuing inflated oil company subsidies, reduced dividends for Alaskans, and next year it starts all over again with the same players.

Sen. Berta Gardner
Anchorage, Alaska

Received June 19, 2017 - Published June 19, 2017

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