Alaska Legislature running out of time to bridge fiscal gap

Posted: Friday, May 09, 2003

With just a week and a half left of this year's legislative session adjournment is scheduled for May 21 it's easy to wonder what will happen to the myriad of proposals that have been floated to help bridge the state's fiscal gap.

It's clear an income tax is not in the cards (see Gov. Murkowski's guest column, although a sales tax is looking increasingly likely. Where other proposals including higher taxes on charitable gaming, the elimination of longevity bonuses, higher user fees and new user fees and taxes may go is anybody's guess.

Each proposal has its own supporters and detractors. As one legislative observer noted, there are 600,000 Alaskans and a million different opinions on the best way for Alaska to put its financial house in order. No plan is going to please everyone, and a plan that won't win the approval of the House, Senate and governor is a plan that won't help. Alaska certainly doesn't need that.

For Alaskans not in the thick of legislative action, it's hard, almost impossible, to know how all the pieces being proposed fit together and what their effects will be.

Proposed changes in how charitable gaming would be taxed are a great example. If higher taxes on charitable gaming will leave a big hole in the budgets of nonprofit organizations that add to the fabric of Alaska life in countless ways, then it's fair to ask if those taxes are really worth the cost. While there's plenty of room to argue the pros and cons of charitable gaming and the extent to which nonprofit organizations depend on it, there's little room to argue that gaming proceeds allow nonprofits to help themselves and, consequently, the Alaskans and the communities they serve. If more goes to state coffers and less goes to nonprofits, who will fill that hole?

Earlier this year the House established a Special Committee on Ways and Means to consider ways to control state spending, identify ways state government programs may be made more efficient and propose new measures to raise additional state revenue. The committee's existence is proof that legislators recognize the state's dire financial straits. In fact, the only "whereas" in the resolution which created this special committee puts the problem in perspective: "... (I)t is urgent that the state government bring its spending and revenue into balance to ensure that essential services are provided and to protect the economic stability of the state."

With a general fund budget of about $2.5 billion a year, Alaska takes in about $1 billion less than it spends each year. For too many years, the budget shortfall has been offset by dipping into the state's Constitutional Budget Reserve. That reserve could run out in as early as two years, if Alaskans don't change their ways.

Clearly, something must be done sooner rather than later.

Alaskans wanting some guidelines about how best to judge the proposals being debated in Juneau might want to consider the five elements the House Special Committee on Ways and Means believes a fiscal plan should contain: controlling costs, managing and protecting the permanent fund, raising revenue, putting an emphasis on resource development, and not taxing Alaskans unnecessarily.

A fiscal plan with those components could go a long way toward putting the state on stable financial ground. No, it won't be painless and it won't instantly turn the state's financial tables around. The longer Alaskans wait and oppose every measure that affects a favorite program, however, the harder it will be.

With less than two weeks left in the session, it's naive to hope for a miracle. It's not unreasonable, however, to urge lawmakers to do something anything that will move the state away from the brink of financial ruin.

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