Wolf: Balancing state budget will require more massive cuts

Posted: Wednesday, November 19, 2003

Alaska's struggling economy, the budget deficit and the need to curb spending will dominate the upcoming legislative session, Rep. Kelly Wolf, R-Kenai, told the Soldotna Cham-ber of Commerce luncheon crowd Tuesday.

The big question, he said, was whether balancing the FY 2005 state budget will require more massive cuts, as Gov. Frank Murkowski has proposed, or whether a state sales tax, an income tax, or a combination of the two, might come into play. Wolf was clear that the financial problems facing the state would affect decision-making. Then he asked for advice.

"We've got some major problems with expenditures in the state of Alaska," he said. "We have decisions we have to make down there in Juneau, and I would like to hear from folks here on the Kenai Peninsula about what they would like to see us (do) as state representatives," he said.

Wolf declined to speculate about exactly what Murkowski might propose in the way of cuts, though the figure of $250 million has been reported. Wolf said people will have to decide whether to make the cuts or start looking for other revenue streams, including taxes. He would not, he said, vote to tap the Alaska Per-manent Fund dividend.

"I don't like taxes. I don't care for them, but I made it very clear when I ran for office that I wouldn't touch the PFD. You're going to have to stand on my head and beat me to get me to do anything else, because there are an awful lot of people out there who've said, 'Don't touch the dividend,'" he said.

As to the permanent fund itself, Wolf said the percent-of-market-value scheme for handling the fund is a topic of discussion across the state, but he offered no personal insight into its efficacy.

"In my own personal opinion, the jury is out. I'm not going to touch it," he said, adding he wanted to hear from his constituents first.

Among luncheon audience members, opinion was split over what kind of taxes would be acceptable.

One man said he thought a solution could involve a combination of revenue factors, including more cuts, taxes -- he preferred an income tax -- and tapping a percentage of the permanent fund earnings. Another person said she was all for a state sales tax because it would tap the pockets of tourists, but she opposed an income tax. She also opposed touching the dividend.

Wolf said he leans toward a sales tax as a way to avoid some painful cuts, saying he could "hold my nose and push the button." He said he could do that, in part, because sales tax proposals discussed so far included a sunset clause, meaning any sales tax law eventually would go away unless formally revisited by the Legislature. While a sunset clause could be waived, he said, at least lawmakers who voted to continue a tax would have to look their constituents in the eyes and explain why.

Wolf cited population statistics to help paint a picture of possible revenue streams. A little over 10,000 Outside workers earn a living in Alaska, he said, but they take that money home because there is no income tax.

Tapping that funding source might be helpful, but Wolf also said that if an income tax was instituted as has been proposed, only 38 percent of Alaskans would end up paying any tax. Meanwhile, industry figures say as many as 1.6 million tourists stream here each year. A sales tax would tap that resource, he said.

The Republican-led Legislature was finishing a five-year plan to cut $250 million from state spending as Murkowski took office as governor. In his first year, the governor cut another $137 million in line-item vetoes, with a promise of perhaps as much as $250 million more in the coming year. While there is rhetoric aplenty about cutting the fat out of government, some residents are asking whether finding more cuts is even possible.

Wolf said he's looking at legislative travel expenses as one possible place to save. He also noted that even the largess coming in grants from the federal government has strings attached. He noted two research vessels Alaska bought with federal dollars that now must be maintained at state expense. He pulled out his wallet and said that even the money coming from the feds really came from the people.

Soldotna Mayor Dave Carey, asked Wolf about funding for student housing as a way to encourage more Alaska young people to go to college here rather than Outside. Wolf said he doubted the Legis-lature would be in the mood to fund such projects given the financial crunch. He suggested the Univer-sity of Alaska consider selling some of its land.

The upcoming session is likely to get interesting quickly, Wolf suggested. Within the first five days, lawmakers will consider overriding the governor's veto of the Longevity Bonus program, he said. Again, he deferred to constituents.

"It will be brought up in the first part of the session, and I would like to hear from people," he said.

A freshman lawmaker last year, Wolf was not the primary sponsor on many bills, though he did sign on as co-sponsor to the bills of others.

Only one Wolf measure has passes so far -- a resolution declaring Alaska Wild Salmon Week. He said Tuesday he would sponsor a similar resolution again this year.

Last year, he also sponsored bills to prohibit cell phone use while driving, regulate lobbying by nonprofit organizations, prohibit the release of predatory fish and promoting restoration of riparian habitat. Those bills remain in House or Senate committees.

Wolf said this year he intends to sponsor a bill that will require insurance companies to include gastric bypass surgeries as covered procedures.

Asked for his thoughts on adding electronic video gambling as permitted gaming under state law, Wolf said he believes it would create more problems than the revenue would justify.

Sarah Jones, an language arts teacher at Soldotna High School, said she isn't hearing enough discussion about funding for education. She said some classes have as many as 32 students in rooms built for 25. She said the school offers its more than 500 students just one choice of foreign language and offers physics only every other year. She said she has "watched the system slowly fold."

Wolf asked what people mean when they say they want full funding.

"Give me a dollar figure. Some-thing I can take to Juneau. Some-thing we can quantify," he said.

An educational forum is scheduled at Soldotna High School on Saturday, she said, adding that he likely would find an answer there.

Wolf is scheduled to attend.

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