Will it take financial crisis for Alaskans to embrace taxes?

Posted: Friday, April 13, 2001

The front page headline in Thursday's Peninsula Clarion said it all: Surplus today, deficit tomorrow.

It topped a story about the state's revenue projections. For this budget year, the Alaska Department of Revenue is predicting a surplus of about $1.5 million -- $100 million less than it had predicted in December, just four short months ago. For the budget year that begins in July, the department is forecasting a deficit of about $622 million.

This year a surplus; next year, a deficit.

Most of us have known that experience with money in our own pocket: here today, gone tomorrow. It's not pleasant. Most of us do whatever we can to avoid it. We quit going out to eat. We clip coupons. We buy cheaper brands. We don't make so many long-distance calls. We shop second-hand stores and garage sales. We cut up our credit cards.

We take a second -- or even a third -- job. We look for ways to become more marketable in the workplace, so we can get a better paying job. We work overtime.

We know operating in the red -- spending more than we make -- is a trap from which it's difficult to free oneself.

That's why we have such a hard time understanding what seems to be the Legislature's lack of urgency regarding the state's fiscal crunch.

It's true lawmakers are not waiting for the proverbial sky to fall. On the other hand, they seem to be testing the waters of public opinion before making any kind of a real stand on what needs to happen.

And what needs to happen is the state needs some new sources of revenue; in other words, new taxes.

The Senate Finance Committee earlier this week introduced a package of measures billed as a first step in the development of a long-range fiscal plan.

Even though Sen. Dave Donley, co-chair of the Senate Finance Committee, admits "additional state revenue will be a needed element in a new long-range fiscal plan," such additional revenue is not a part of the bills introduced.

Instead, the focus of the bills is "continued government reforms to create a more efficient and fairer state government." Only after such reforms should Alaskans be asked to consider any major new taxes, says Donley.

We couldn't disagree more.

Just as most people are unable to dig their way out of debt by clipping coupons, Alaska can't reform itself out of its fiscal gap. That doesn't mean that some reforms aren't worth discussing.

Nevertheless, we fear Alaskans won't warm to the idea of taxes until all other options have proven to be too little too late. Why should they? After all, the price of oil could spike once again and, once again, the state's budget outlook would be bright, at least temporarily.

On the other hand, the price of oil could plummet. Then, drastic measures would be required -- no ifs, ands or buts about it. Would Alaskans be any warmer to the idea of new taxes then?

It would be easy to blame fickle oil for the state's fiscal woes. After all, in December, oil prices of $30.17 were predicted to give a surplus of $116.5 million. The spring projections put the price of a barrel of oil at $27.61 -- about $10 above the historical average. In the not too distant past, however, prices fell to below $10 a barrel.

Are we any better prepared now than we were two years ago for such a fall?

The truth is Alaskans have not managed their resources well. It's ludicrous that our children, health care, schools, roads and public buildings are lacking in the most abundant state in the most abundant nation in the world. What kind of real budget problems can a state which gives its residents $2,000 a year have? What gives?

We appreciate the work of legislators involved in the new Fiscal Policy Caucus. We appreciate the Senate Finance Committee's efforts to further reform and refine state government.

However, we long for legislators to take the difficult stand that it's time to implement new taxes and use some of the earnings of the permanent fund -- whether Alaskans are warm to those ideas or not. If legislators aren't ready to take those tough stands this year, do you think they'll have any more backbone next year, when most, possibly all, of them will be up for re-election?



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