State needs to move beyond rural-urban divide, work together

Posted: Tuesday, July 29, 2003

Alaska has for some time now been mired in a furious and unhealthy tug of war between its urban and rural regions. The arguing erupted yet again in recent days, with members of a special legislative committee being accused of robbing the rural regions simply because they rejected a plan by the governor to sharply, and unfairly, increase state aid to many small communities.

At the center is Gov. Frank Murkowski and his incomplete vision for helping these towns and villages.

Most of the problem stems from the governor's veto of $37 million in state aid to local communities urban and rural throughout the state and from his corresponding plan to use $14.7 million in federal aid this year to temper the damage. The federal money is the first of two annual payments being made to the states as part of President Bush's tax relief package.

The complaining over the veto of the Revenue Sharing and Safe Communities programs might have run its natural course and faded with time had the governor not miscalculated. Rather than distribute the replacement federal aid in accordance with a formula that has been in place for many years and that communities have generally accepted as fair, the governor chose to raise the minimum amount that 131 of the state's 162 communities would each receive.

By raising that minimum to $40,000, the governor sought to ensure that 102 communities would receive an increase in aid over the prior year even though just under half of last year's total funds was available.

How would this magic have worked? The governor's plan would have taken $2.9 million from 31 other communities, money they would have otherwise received under the old formula which the governor, in a June 9 letter to mayors throughout the state, had said he would use. With the governor changing his mind, the city of Fairbanks and the Fairbanks North Star Borough stood to lose $420,315 combined.

The Legislative Budget and Audit Committee correctly rejected the governor's allocation plan earlier this month and restored the old formula, essentially cutting every community's aid package by half allocating the pain equally since the available money had fallen by half.

The governor argues that most small villages and communities have difficulty raising revenue locally and need the extra money. On this issue the governor is correct property does not have sufficient financial value in villages to lead to sufficient revenue from the imposition of a property tax, and costs are generally higher in the Bush. Few will argue this point.

This, then, is a clash of need versus fairness.

Regarding need, the existing formula is already slanted toward rural communities. Each receives a base amount before the remaining sum is divided among all communities, urban and rural. And the two programs, Revenue Sharing and Safe Communities, were not designed to award money based on year-to-year need. Given this, should the formula be further weighted toward rural communities?

Some might argue that urban areas can better withstand cuts in state aid and that the Legislative Budget and Audit Committee should have considered this and retained the governor's plan. Urban areas have solid economies, after all, providing a good base from which local governments can tax and save.

It is not the job of legislators, however, to decide which communities are in sufficient fiscal health and which are not outside of an emergency and then award state money accordingly. The Fairbanks North Star Borough is much better off than the city of Fairbanks, for example. Should that factor into how state money is given? Certainly legislators could create a program based on need, leaving it to individual local governments to decide whether to apply.

So with the Revenue Sharing and Safe Communities programs stripped away, and with a general agreement that the needs of the rural areas do need help, what is to be done? Although the governor professes a sympathy for village and rural residents and their community needs, he has no plan beyond this year. This must change.

While many stood to gain under the governor's formula for this one year, he has not committed to giving a similar amount of money from the second year of the federal windfall. And his spokesman acknowledged on Saturday that the administration does not have a longer-term strategy for helping communities.

If the governor is so concerned, he should campaign vigorously for a statewide income tax and modification of the Alaska Permanent Fund distribution to ensure that sufficient money is available for rural communities in the near-term.

Urban and rural legislators have some work to do also. Either they must work to override the governor's veto of the two aid programs or, since there is acceptance that rural Alaska has special challenges, create an aid program just for rural Alaska. And they must join the governor in making a general repair of state finances.

Lastly, opponents of the Legislative Budget and Audit Committee's decision should end the rhetoric about a worsening rural versus urban divide. The real divide here is one of spending versus revenue.

Fairbanks Daily News-Miner

July 20

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