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Torgerson: Price of oil can't close state budget gap

Senator favors seasonal sales tax

Posted: Sunday, January 13, 2002

Once, Alaska could rely on America's conflicts to prop up the price of oil, but that hasn't been the case with the anti-terrorism battle in Afghanistan, Sen. John Torgerson said Thursday.

Oil prices have fluctuated around the $18-a-barrel mark recently and could well stay in that range for months, according to forecasts. That won't do much to help state lawmakers balance the budget this session. The latest figures from the Department of Revenue aren't pretty. They predict the need to dip into the state's Constitutional Budget Reserve to the tune of $865 million by the end of fiscal year 2002, and withdraw as much as $1.078 billion more in FY 2003, according to Deputy Commissioner Larry Persily.

Alaska is closer to running out of money than at any time since the oil began pouring megabucks into state coffers, Torgerson said.

"It's pretty evident that the problems are more serious now," he said. "The price of oil won't bail us out."

There are ways to generate new revenues, but legislators have been loath to make them law and face the political fallout. Though none are popular, Torgerson said, taxes are going to be considered.

"I favor a seasonal sales tax," he said.

According to Torgerson, a 1-percent sales tax would generate $160 million a year if applied annually, somewhat less if only during the six months of heaviest tourism. How much was raised would depend on what items were exempted, he said. The Legislature also has the options of raising taxes on cigarettes, liquor and fuel, and instituting an income tax. Torgerson doesn't like the last option, but other lawmakers do, he said.

"There are 60 opinions in this building," he said., referring to the state Capitol in Juneau.

A mix of new revenue generators also has been suggested, including sales and income taxes and tapping the Alaska Permanent Fund, or at least its dividend pool. But Torgerson doesn't like the "little of everything" approach.

"It would create a huge bureaucracy, Torgerson warned.

Education will be among Torgerson's highest priorities this session. Its funding has been eroded by inflation, he said.

"We fixed the university system over the years, giving them a steady source of money. We need to do that with public education," he said.

Torgerson said he would support an increase in the foundation formula. He also said he wants a viable vocational education program for Alaska.

He said he'd also focus on transportation. During the past couple of years, the state has paved many gravel roads. Torgerson wants to keep those roads on the front burner and see that they now make the state's list for major upgrades. Other transportation planning he'll be watching includes the Cooper Landing Sterling Highway project, estimated at $60 million, and rebuilding the bridge across the Kenai River in Soldotna, he said.

Public safety won't be ignored, he said, with the heightened awareness since Sept. 11. But the state should be prudent. Referring to Gov. Tony Knowles' call for $100 million to support his Homeland Security Initiative, Torgerson said, "I'm not going to support $100 million and put a camouflaged trooper behind every tree."

But while concern over possible terrorism shouldn't drive policy entirely, there are some prudent steps that should and have been taken at airports and ferry terminals, and Alaskans can look forward to some new security measures, he said. The difficulty will be doing that while maintaining the freedoms Alaskans enjoy.

"We need to keep the integrity of being Alaska, keep our independence and what we are used to," he said.

Security measures at airports that serve jet traffic will get stiffer, but airports in places such as Homer and Kenai shouldn't see much change, he said.

The state's proposed redistricting plan could pit Torgerson against fellow Republican Sen. Jerry Ward, should both choose to run for re-election. Torgerson declined to announce his intentions regarding the Legislature, or about his rumored desire to be mayor of the Kenai Peninsula Borough. Neither would he comment on a possible Ward-vs.-Torgerson primary.

As to the redistricting plan itself, Torgerson said, the Alaska Redistricting Board did a generally good job on the Kenai Peninsula, though he expressed disappointment that the board had adopted "the Democrats' plan," one that has led to the current Superior Court challenge.

On another local issue, Torgerson expects to hold hearings on Homer's annexation proposal perhaps as early as the first or second week of the session.

The Local Boundary Commission approved annexation of approximately 4 square miles of territory just beyond the city's current borders. There are certain legal questions surrounding the effect of annexation on service area boundaries and on representation on the Homer City Council he wants answered, he said.



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