Legislature heads toward adjournment without long-term fiscal plan

Posted: Monday, April 24, 2000

JUNEAU (AP) -- In a bottom-floor Capitol office, Rep. Jim Whitaker speaks of the state's fiscal health with an earnestness tinged with freshman frustration.

''It is irresponsible on the part of the Legislature to not produce a long-range comprehensive plan,'' said Whitaker, a Fairbanks Republican. ''We shouldn't leave here until we do.''

Five floors up six-year Republican Sen. Pete Kelly has a different take on long-term budgeting. ''I don't feel a sense of urgency.''

As lawmakers aim for an early adjournment this week, Whitaker's insistence, though shared by some, is drowned by a feeling of affluence.

What a difference a year has made.

Only 12 months ago lawmakers faced a $1 billion budget deficit brought on by a plummet in the price of oil and declining oil production. The state's main savings account, the Constitutional Budget Reserve, would be empty by 2003 unless economics or state policy changed. Clearly, some said, the state needed a long-term outlook.

Now, seven months after overwhelming voter rejection of an attempt to fix the problem by using part of the Alaska Permanent Fund's earnings, talk of any such future planning has vanished like a quarter in Las Vegas.

What happened? Three main events: a near tripling in the price of oil, a corresponding drop in the expected deficit to roughly $350 million and the steady approach of the general election in November.

Also playing into lawmakers' rising comfort level is the status of the Constitutional Budget Reserve. The account holds about as much as it did a year ago, thanks to a recent oil settlement, and is now given a lifespan of four years, assuming policies and oil prices don't change.

To a lesser extent, there is also concern that no one yet knows what voters meant when they voted against the plan to use the earnings of the Permanent Fund to pay for state government.

''There probably should have been more discussion, but I don't know that anything would have got done,'' said Sen. Mike Miller, who is leaving the Legislature after 18 years.

Some Interior lawmakers say, however, that nothing has been done because nothing needs to be done -- at least not yet. Another attempt at a long-range financial plan will come about, they say, when circumstances again become dire or close to it.

''We're going to have budget deficits in our state as standard fare, as an accepted part of doing business in Alaska,'' said Sen. Gary Wilken, R-Fairbanks and a member of the Senate Finance Committee.

Wilken, nearing the end of his first four-year term, suggests draining the Constitutional Budget Reserve to about $1 billion in covering subsequent budget gaps. That will be the time, he suggests, to lessen the draw on the savings account by using some of the permanent fund's earnings and looking for revenue.

Perhaps, too, he said, a natural gas pipeline will benefit the state.

''There are 10 different ways to raise income,'' he said.

But others say nothing can be done because the public still isn't ready for something to be done.

''I don't want to be accused of ramming something down the public's throat,'' said Rep. John Harris, a Republican whose district reaches from Delta Junction to Valdez. ''More members than not are concerned that their constituents are not ready yet for a serious plan.''

Others in the heavily Republican Interior delegation disagree, arguing just as strongly for a plan but saying lawmakers have been paralyzed, especially in an election year. All 40 House seats and 10 of the Senate's 20 seats will be on the ballot.

Rep. Jeannette James chafed at what she sees as reticence among her own leaders.

''It is an absurd situation we are in,'' said the four-term Republican from North Pole. ''No one is willing to step up and tell people the truth.''

''The only way we will get anything done is if we get new leadership,'' said James, who introduced a bill calling for a 3 percent sales tax, more as a point of discussion than with an intent of pushing it through.

''We're all over the place on issues. We couldn't put two dimes together to make 20 cents.''

This session has seen bills aimed at creating a long-range plan. The only ones moving, however, call for more study. Three commissions since the 1980s have studied state finances and recommended similar changes to close the budget gap.



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