As a new year begins, Alaska legislators should resolve once and for all to agree on a long-term budget plan. This year. Not two years down the road. Not after oil prices plummet. Not after some crisis forces the state's hand. Now.
While Alaska is eyeing a windfall that could reach as high as $650 million if oil prices remain high through the end of June, the state still is in need of a long-term fiscal fix.
The windfall can't be considered a surplus. Financial commitments such as the state's retirement systems, the cost of the largest fire season on record and ever-increasing health care expenses are legislative spending priorities that will take a big bite out of the state's budget.
There also is a desire throughout the state to increase education funding and pressure to bring back the Longevity Bonus checks for the state's senior citizens.
Talk of a financial fix is already under way with two House lawmakers proposing a balanced budget amendment to the state constitution. While the bipartisan resolution is appreciated, such an amendment wouldn't go before voters for two years. And that's too long to wait for something almost everyone agrees is a first step to a long-range fiscal plan.
Plus, shouldn't a balanced budget be a no-brainer for legislators?
Alaska has used its rainy day fund, or Constitutional Budget Reserve, to cover its budget shortfalls. That account now contains $2.13 billion.
The pre-filed balanced budget resolution from House Minority Leader Ethan Berkowitz and House Rules Committee Chair Norman Rokeberg would amend the section of the constitution dealing with appropriation limits to read: "General fund appropriations by the legislature shall not exceed anticipated revenue."
Not to take anything away from the sponsors, but it's too little, too late.
It also should be common sense.
Since at least 1999, after oil prices plunged to under $10 a barrel in late 1998, legislators have been debating a fiscal fix. It's getting old. Alaskans no longer take the debate seriously. It's become too mired in partisanship and political gamesmanship.
All the budget debate also makes Alaska appear to be poverty stricken. Nothing could be further from the truth.
As of late last week, the state's permanent fund was valued at $29,915,100,000; in round numbers, that's $29.9 billion. And that's a lot of of money.
Back in 1999, Wilson Condon, who was then the commissioner of the state Department of Revenue, reminded Alaskans that despite the then low price of oil, they lived in a wealthy state: "You can argue that we spent too much on this or that, or should or should not have abolished the personal income tax in 1980, or must or must not hack away at public service budgets. The truth is oil revenue alone will never again pay for what we want, even if we reduce what we want to the barest of minimums."
Condon went on to remind Alaskans of the permanent fund valued then at $25 billion, "the product of more than 20 years of smart saving and smart investing," and the Constitutional Budget Reserve.
"We're still a rich state; it's just that most of our future wealth will come from investments instead of oil," he said.
Mr. Condon's words deserve a read by legislators as they prepare to convene Jan. 10 for the first session of the 24th Alaska Legislature.
And all Alaskans need to re-think why a long-term financial plan is needed. It's not because the state is poor. It's because a road map is needed to use the state's wealth in the wisest way possible.
While officialdom likes to talk a lot about growing the state's economy, there's often not enough recognition given to what role a long-term financial plan plays in doing that. The fact is a long-term financial plan is a necessary building block if the state is serious about growing its economic foundation. Everything else crumbles without it.
Legislators should see their way clear this session to come up with a long-range financial plan. Elements of that plan have been debated enough: using a portion of the permanent fund earnings to help pay for state government, instituting reasonable taxes and fees, committing to resource development over the long haul and controlling the cost of state government.
The only thing left is to do it. Let's hope legislators have the resolve to get the job done before the new year ends.
© 2018. All Rights Reserved. | Contact Us