Fiscal responsibility means establishing fair way to pay for essential services

Holding the line on spending

Posted: Monday, February 11, 2002

Though I wish this article were about holding a fishing line, I think I'd better leave articles on that subject to Stan Harrington or Les Palmer. Rather, this article is about our task as legislators that requires us to hold the line on new spending -- something that's always difficult and a lot less enjoyable.

Nevertheless, we must hold the line on any new appropriations if we are to convince the general public that the billion-dollar shortfall we have is real and that the Constitutional Budget Reserve account is about to be depleted.

Members of the House of Representatives recently passed an appropriation of $6 million for the Alaska tourism industry. This bill (House Bill 359) passed the House by a vote of 25 to 10 with five representatives excused from the session. Those who voted for the appropriation justified doing so as an effort to deal with the affects of the Sept. 11 tragedy that has been estimated to have caused a downturn in bookings in the Alaska tourist industry of 30 percent or more. While I recognize the value of the tourism industry to the state of Alaska, the result of the House's action of appropriating these funds through last year's supplemental budget was to set the tourist industry above all others -- including education.

Both Ken Lancaster and I, as representatives from the Kenai Peninsula, were among those voting against the appropriation. Of course, this was a difficult decision on our part, coming from a very tourism-supported area. My wife, Barbara, by the way, is a partner in a tourist-related gift shop. So, believe me, I was lobbied from all sides.

In the political process, you win some and lose some. While I don't agree with my colleagues for passing this measure, I certainly understand their side of the issue and the pressure they were under -- as were Ken and I.

The larger issue is how serious are we about the state's fiscal policy? During the debate on the House floor pertaining to the appropriation for the tourism industry, there was an attempt to amend the bill to add funds for the Alaska Seafood Marketing Institute. I voted against that amendment also -- knowing all too well the difficult times the commercial fishing industry is facing in regard to the subsidized competition from farmed fish, the effects of Sept. 11 and being an industry in need of some serious revitalization.

In addition, commercial fishing is an industry that pays its fair share to the general fund and has its own self-supported advertising program through the Alaska Seafood Marketing Institute.

When people demand more cuts to programs and speak out strongly against implementing new revenue-producing measures, they often don't consider the direct relationship the royalty oil and severance tax earnings have on our budget. (Because there is more stability with oil and gas property and corporate taxes, these factors don't have much impact on the equation, so I won't discuss them here.)

However, let's consider this year's oil and gas production tax plus the royalties from oil and gas as compared to those the state will receive in 2002 and then in 2003: This year we will receive approximately $1.475 billion from these taxes as compared to the $978.6 million projected for 2002 and the $863.7 million projected for 2003. It is clear that the cuts necessary to balance the budget without new revenue would be $497 million in 2002 and another $115 million in cuts in 2003.

Because the dwindling oil dollars that we have been so fortunate to have for the last 23 years are not keeping up with Alaska's growing needs, we must establish new revenue streams to fund even essential state expenditures.

First, however, we, the people, need to resolve that there are no sacred cows -- be it education, tourism, fishing, government or even the oil industry. We can demonstrate our commitment to our resolve by "holding the line" on all expenditures until we have established a fair and comprehensive way to pay for essential services. Unfortunately, this also means that some of us may be sleeping on the couch.

Rep. Drew Scalzi, a Republican from Homer, is in his first term representing District 8 in the Alaska House of Representatives.



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