Doing nothing wrong answer

Some politicans more interested in getting re-elected than bridging fiscal gap

Posted: Friday, March 08, 2002

I have begun to compile a list of legislators who seem to believe their constituents are so uninformed that they can insult their intelligence without any repercussions.

The following legislators must not know what a billion dollar budget shortfall means or they must believe they can con their constituents into believing that projected shortfall will have no impact on the people of Alaska if they do nothing about it Those legislators are U.S. Sen. Frank Murkowski and state Sens. Dave Donley, Jerry Ward, Pete Kelly and Rick Halford and Rep. Vic Kohring. How many others have a similar view, I don't know because they haven't expressed their views yet in public.

In the Feb. 26 Peninsula Clarion, Ward presented his budget deficit five-point plan which more or less reflects the thinking of all of the people above, to wit:1) cap government spending; 2) protect the permanent fund dividend; 3) shrink government; 4) encourage economic growth; and 5) no new taxes.

In other words, shirk their responsibilities and do nothing, except try to get elected (to governor) or re-elected.

This is no plan; it's a sham. Let's take the five-point plan one item at a time.

1. Cap government spending. Some state expenditures are indexed to inflation by laws which were passed by the Legislature. As a result, these costs will rise each year unless these indexing laws are repealed. There probably are some efficiencies and cost reductions in some government operations which could be realized but none of the above legislators has specified any proposed spending cuts or agency consolidations precisely or suggested how much money those cuts or consolidations would save or what impacts would be realized. This item is "smoke."

2. Protect the permanent fund dividend. All of these legislators know that if they really want to raise the ire of 83+ percent of Alaska voters and seriously risk not being re-elected, all they have to do is recommend eliminating or even significantly reducing the dividend -- in an election year -- so they'll wait a year on this item, even if they believe it's necessary.

3. Shrink the government. Where exactly? How precisely? What services will be lost? How many jobs will be impacted? How much money will this save? Government agencies are created by law (by the Legislature) so eliminating or combining state agencies would require repealing some existing laws and creating some new ones. Not one legislator has provided any detailed information on this proposal; just a lot of arm waving! Without detailed, factual information to allow making informed decisions, this item is absolutely meaningless! This item is related to Item No. 1 above.

4. Encourage economic growth. Well, duh, it's really difficult to attract year-round industries to build new manufacturing or processing plants in Alaska when it is so remote from many raw materials suppliers, it has a very adverse climate six months each year, the cost of living is relatively high, and the state has hardly any infrastructure to support such plants. If this item is so beneficial, why hasn't it been done already? And if we doubled Alaska's annual income from all natural resource industries (except petroleum products), we might gain $25 million to $50 million dollars, a far cry from the billion dollars needed. This item is also "smoke."

5. No new taxes. Well, if you are a billion dollars short and declaration of bankruptcy is not an option, what other choices, besides new taxes, are there? Even if the Arctic National Wildlife Refuge is opened to exploration, new income to the state from new oil or natural gas is many years away -- but our projected state budget deficit is not.

Sen. Ward's (and the others') five-point plan is nothing but rhetoric based on fear of not being re-elected! It seems to assume that the voters of Alaska will want to believe this plan so badly that they will re-elect him and others of his ilk. For each year these legislators fail to live up to their responsibilities to their constituents, the monetary impact on each Alaska resident will be increasingly greater.

Those who say wait, do nothing, and the impact will be increasingly worse are right on the mark. Oil revenues are declining and one of these years Ted Stevens will retire from the U.S. Senate. The federal monetary benefits to Alaska, due to Sen. Stevens, are enormous!

I would be remiss to criticize our legislators without offering a budget revenue plan of my own, as follows:

1. Hire one or more consulting firms (not lobbyists) to identify any obvious areas of Alaska government spending which can be cut or state agencies combined to save money. This comprehensive effort would take about a year (report ready for the 2003 legislative session) and would include estimates of money to be saved, services lost and impacts -- a kind of cost-benefits-impacts package so everyone in the Legislature would be on the "same level playing field" regarding proposed capping, spending and shrinking the government. This effort would have to be authorized by the Legislature and paid for by the state, with the concurrence of the governor, to provide credibility to the voters.

2. Impose a graduated income tax, based on some percentage of a person's federal tax. A flat tax would penalize the poor unfairly.

3. Pass an aggressive tax on alcoholic beverages to help the state pay for alcoholic beverage-induced: a) increased law enforcement and the courts, b) social workers to address domestic violence and child abuse, c) prisons for driving while intoxicated and other felonies, d) treatment for addicts, etc. This tax should be indexed to alcoholic beverage price increases.

4. Impose a seasonal state sales tax from May to September to allow tourists and other visitors help pay for state and municipal infrastructure (such as roads, sewage treatment, airports, increased law and fish and game enforcement), that are necessary to accommodate an approximate tripling of our state's population in those months. A head tax on visiting cruise ships also would be appropriate for the same reasons. Alaska residents could avoid some of this tax by stocking up and making any large purchases October through April.

5. Cap the permanent fund dividend at some reasonable, sustainable level (say about $1,250 per person per year), if necessary, and the rest would be available to support quality education or other government operations-infrastructure, based on the results of the study in Item 1 above. The study suggested in Item 1 above may recommend that capping the dividend is not necessary.

I do not know what might be available in new revenues from the petroleum industries, but my guess is those revenues to the state will continue to decline into the future, with or without ANWR. As a minimum, I would be sure that these and other natural resource extraction industries are not leaving or will not leave any site cleanup activities and costs to the state when the recoverable resource is exhausted and a site is abandoned. I would also be sure their spill recovery and waste disposal plans are better than what they have demonstrated to date, with oil and gas exploration and drilling, the pipeline, minerals extraction, logging and our waterways.

I believe this plan to be viable and defendable, although not desirable to anyone. But we are where we are, and there seem to be few other options. I would like to hear from any legislator who would like to debate this subject.

Richard Hahn is a retired member of the U.S. senior executive service who now lives in Soldotna with his wife, Loretta. They enjoy almost all outdoor activities, the arts, the beautiful Alaska scenery and relaxed lifestyle, and the friendly, helpful people. He has more than 30 years experience managing and budgeting large government programs for the Department of Energy.

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