Hickel floats plan to cover gap in budget

Posted: Wednesday, July 30, 2003

JUNEAU Faced with millions of dollars in cuts to municipal programs by the state, Alaska cities are looking for solutions to budget shortfalls. Former Gov. Walter J. Hickel says he's got one: using money from the permanent fund dividend.

Hickel, founder of Institute of the North, an Anchorage-based organization that explores Alaska public policy, said the community dividend would take half the money used to pay the dividend and distribute it to cities.

"It came out of the whole idea of my objection to the dividend going out with no benefit to the state," Hickel said, noting that Alaskans have traded in their "pioneering spirit" for a "gimme mentality."

He said the state has paid out about $6 billion in personal dividends since cutting the first checks in 1982.

"Just think of what half of that would have done for the state of Alaska," he said. "... What does the dividend do for the state now? They buy a ticket to Maui or to whatever they want to do."

The community dividend could be used at the discretion of local governments, or residents could vote on what projects to fund, Hickel said.

"They will make the decision, not Juneau, on how to spend the money," Hickel said.

Fay Von Gemmingen, an Anchorage Assembly member and president of the Alaska Municipal League, said budget cuts to municipalities this year by Gov. Frank Murkowski have left many cities searching for other revenue alternatives.

"The cities are in bad shape, and we need the moneys that we get from the state from the revenue sharing-safe cities fund," she said. "That helps us pay for our police and our fire, our health and our roads, all these things that are direct services to the people in our cities. We also needed the capital matching grant money that was deleted in the governor's budget. That's something that we've always used for significant projects to keep our public buildings going as well as road projects."

Altogether, the cuts totaled $37 million in savings to the state, but left municipalities to fill the shortfall.

In June, Murkowski announced the state will distribute $14.7 million in federal money to communities to help mitigate the impacts of the cuts. But there is no guarantee that the money will be available in future years.

Like Von Gemmingen, Juneau Mayor Sally Smith, who serves as District 2 director for the Alaska Municipal League, said she thinks the community dividend is a good concept. But Smith said she isn't sure how much of the personal dividend would need to be used to cover municipal shortfalls.

"... This isn't a grab for peoples' dividends," she said. "This is part of the dialogue for finding a solution to the state's fiscal situation."

She said it is one of many ideas that should be considered in the development of a long-range fiscal plan. She also noted that the community dividend would probably have to be part of a larger fiscal plan in order to gain acceptance by voters.

A community dividend proposal by Democratic Rep. Carl Moses of Unalaska was passed by the state House of Representatives in 2002 on a vote of 30-9, but the bill died in the Senate. Moses did not introduce the bill in this year's legislative session.

Smith said finding revenue to fill the budget shortfall could be a life or death situation for some smaller communities.

"I've heard some people say we will have to dissolve, and it will be a tribal government," she said.

Murkowski communications director Dennis Fradley said the governor has spoken to Hickel within the last year about the community dividend, noting that Murkowski has given serious consideration to the concept.

"It is a subject that is on the table," Fradley said.

Timothy Inklebarger is a reporter for the Juneau Empire.

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