Entering an election year might have many lawmakers feeling nervous about making any radical moves for fear of political fallout next November.
Yet the Legislature can hardly afford to sit on its hands and do nothing about the looming budget deficit, Rep. Ken Lancaster, R-Soldotna, said Friday. If making tough decisions about spending and raising revenues means his own defeat at the polls, he's willing to live with that, he said.
All but three members of the Legislature face re-election in the fall. Those three represent districts left unchanged by the court-embroiled redistricting plan.
"I'm not a tax-and-spend kind of guy. I'm your average Republican," Lancaster said. "I don't think we can go down there and mill around and do nothing. I said this last year. If I don't get elected, someone else will go down there and sit in my chair."
Lancaster is part of the Fiscal Policy Caucus, a bipartisan group of legislators from both chambers working on the fiscal gap. The group has listed possible approaches, including an income tax, a sales tax and taxes on things like alcohol, gasoline, cruise ships, oil and natural gas. The plan also calls for $100 million in budget cuts.
Lawmakers can't afford to ignore those ideas, no matter how painful, Lancaster said, adding that he hoped the caucus would remain together. He acknowledged that the ideas would be "a hard sell" in the Senate.
For instance, support may be hard to find for taxes on oil -- Alaska's "golden goose," he said. Tourism industry representatives aren't likely to look kindly on a head tax, nor will the cruise ship industry like a tax on its passengers.
A broad-based solution may be preferable, but lawmakers may have to be more pragmatic and adopt a few revenue generators, such as an income tax, and let future legislatures finish the job of matching revenues to expenses.
"I'm a firm believer in starting slowly," he said.
Without a long-range fiscal plan, however, Alaska is treading water, Lancaster said.
"Today, we have nothing. That's been the scary part of the past 20 years," he said.
Like it or not, legislatively the Alaska Permanent Fund may be the easiest source of money to tap, though politically it may be one of the toughest. Lawmakers can spend the earnings reserve and cap the dividend without a public vote.
"You have to assume it (the fund) will be part of a package if there is a package," he said.
Alaska might do well raising funds by selling bonds, using the permanent fund as collateral. Bond interest rates are low right now and the state might recoup some of the interest it would have to pay out on the bonds with the interest the permanent fund and the budget reserve would earn sitting in the bank. Plus the principals of those funds would remain untouched, he said.
Whatever revenue plan emerges, it will have to address the other side of the coin -- expenditures -- if lawmakers expect public support.
"We will never get the public buying in if we don't create some efficiency," he said.
He backs a 90-day session and consolidation of various state departments as ways to save money. Alaska might also save money if it got out of the rocket-launching business on Kodiak, he said. According to Lancaster, two rockets were launched last year from the Kodiak Launch Complex operated by the Alaska Aerospace Development Corp., generating $100,000 each. But operating the facility includes the cost of 25 workers' salaries and benefits, maintenance and the price of subcontract work.
Lancaster said the facility should be sold and privatized.
"Let someone else take the hit," he said.
Lancaster said he would concentrate his efforts on energy legislation he has sponsored. House Bill 175, among other things, would appropriate funds from the Constitutional Budget Reserve to the Alaska Industrial Development and Export Authority for various power projects, including $4.8 million to Homer Electric Association for the Seldovia-Port Graham-Nanwalek regional power project. Lancaster said he might seek to change the funding sources, however, and use $90 million from the Railbelt Energy Fund.
He said he'd also like to find a way to endow the Power Cost Equalization Program, which is meant to keep power costs in the Bush low enough to afford, so that it could become self-sustaining.
Education also is high on Lancaster's list of priorities. He said he favors an increase in the foundation formula.
Municipal wish lists may have a rough go of it in the midst of the budget crunch. That goes even for utility and health and safety projects.
"We'll be doing darned good if we can save those," Lancaster said.
He said Homer might not get funding for its library this year, and even road projects will be scrutinized.
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