Gov. Frank Murkowski's veto pen did more than just cut the state budget $138 million. Its ink sent a couple of loud messages.
To the Legislature it said this: First, you didn't have the political courage, despite your claims that you want a lean budget, to actually make the cuts. So I did it for you. Second, I will do it again next year, and deeper.
To Alaskans in general it said this: Since you have insisted on keeping your permanent fund dividend and have a history of castigating legislators for even discussing taxes or using some earnings of the permanent fund, prepare for deeper cuts. Or rise up and tell me otherwise.
Now that Alaskans have seen what their governor will do, they are left to ponder those messages before legislators return to work in January.
Foremost, Alaskans must determine if Gov. Murkowski is guiding the state down the correct road and if his fiscal plan is plausible and sound.
The governor has chosen to put faith in a five-year effort to bring additional revenue from natural resource development, banking on incentives approved this year by the Legislature to lure industry to spend more. He puts faith, too, in a belief that those incentives will bring enough money though his aides so far have been unable to define how much the state might expect.
While the clock ticks on those incentives, the governor says, government will have to be cut so its budget reserve can be made to last a bit longer until the arrival of that unknown sum of new revenue.
Yet the governor's idea also may damage the effectiveness of that budget reserve. The $2 billion safety net, which for many years has been used to balance the budget, could be near empty at the end of the five years, though its life could be extended further through budget cuts, interest earned by the account and the arrival of additional revenue. But the Department of Revenue has said the account should hold at least $1 billion, enough to balance the budget for two years when oil prices fall, as they so often do.
Although the governor's resource revenue ideas may indeed produce the desired result, Alaska cannot afford to have its future attached solely to a plan that only might solve its fiscal problem and that could run its savings account unacceptably low. The governor's aides acknowledge there is no guarantee that the oil and gas industry will flood the state.
Alaskans must weigh this.
If residents are not willing to put faith in a single plan, they must urge the governor and Legislature to work simultaneously on a second track: a package of measures that includes placing a constitutional amendment on the 2004 ballot to redefine how earnings of the Alaska Permanent Fund can be spent on state government and passing a bill to impose an income tax. Together, the two could provide about $1 billion for state spending and stabilize the budget and the annual dividend payment. That, too, can help attract business, which likes to settle in places with a solid fiscal policy.
The governor must sign on to a vigorous campaign in favor of this second track. So far he has changed his thinking since the election and come to recognize that a statewide levy is needed though he prefers a sales tax, which has many flaws, to an income tax. He has remained quiet on the permanent fund revision though he has not opposed it.
Alaskans must begin considering what size government they want. Sadly, most don't have a tangible near-term stake in the debate other than their beloved annual dividend and therefore pay scant attention to how the governor's actions affect their fellow citizens. But more cuts are coming, that is clear, and they could strike at programs used by those who now walk in ignorance.
Alaskans also must recognize they, too, are partly responsible for the state's fiscal mess through their years of rewarding candidates who promise no taxes and no use of the permanent fund. It's time for residents to say they are ready to pay and ready to reject the coming claims from hotheads that legislators are out to raid the permanent fund.
This is gut-check time for Alaska and its leaders.
The House, by holding serious discussion on the long-term fiscal problem earlier this year, showed itself as the body more ready to find a solution though it did not find one. The Senate, by contrast, simply let the House work alone.
And Gov. Murkowski, like him or not, has done Alaska a favor by forcing discussion of the state's fiscal problem like no Alaska head of state before him.
Alaskans, as they consider the messages sent by the governor's vetoes, now need to decide what message to send back.
The Fairbanks Daily News-Miner,
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