State spending solution won't be found in one place

Posted: Sunday, November 23, 2003

If Thursday night's public meeting on the state's financial situation is any indication, Alaskans have good reason to hope that in the not-too-distant future the state will once again be living within its means.

While some admonished legislators to cut more "Harden your heart and sharpen your ax," advised one resident others offered their advice to help find solutions to the state's fiscal crunch.

One high school student testified that she would be willing to completely give up her permanent fund dividend check if that money would go to education instead. After all, she asked, what good is it to be rich and uneducated?

Education, in fact, was on several people's minds, particularly inequities in the foundation funding formula, which is used to distribute money to the various school districts in the state. More than one person told the lawmakers the formula shorts Kenai Peninsula Borough School District.

Lawmakers, however, were careful not to promise more funding for education; instead, they pointed out that education accounts for 40 percent of the state's budget.

One student's observations helped illustrate the challenges facing legislators. If after-school activities are cut because of a shortage of funding, then more kids will be on the streets, getting into trouble and using alcohol and drugs, the student testified. The underlying question, of course, is: Will lawmakers consider the consequences of the cuts they make and how they may end up costing the state more money in the long run?

While there was no consensus among those participating about what specific course of action legislators should take, plenty of good ideas were shared. The ultimate solution to the state's financial mess should involve a combination of some, if not all, of the suggestions: control costs, get a handle on government growth, set a spending limit, re-establish an income tax and use part of the permanent fund to help pay for some of the cost of doing business as a state.

No matter what legislators do, they will not please everyone, but do something they must.

Lawmakers' greatest challenge as they work to close the gap between what the state spends and what it takes in is convincing Alaskans they will handle new revenue no matter what its source responsibly. Lawmakers need to show that any new revenue to balance the budget will go to essential services education, public safety and roads not to grow government.

Although lawmakers on Thursday night offered strong testimony that the state could not cut its way out of a $600 million deficit, that is a message many Alaskans still seem unwilling to hear.

Nevertheless, eliminating all state government but education, public safety and roads would result only in a $471 million savings. Not enough to cover the deficit. To balance the budget through cuts would mean a 25 percent reduction. Cutting some programs would result in the loss of federal money, which, like it or not, provides a big boost to the economy of the state. A variety of taxes still does not cover the gap between spending and revenue.

The question Alaskans must answer for lawmakers is: What are we willing to pay for?

While many Alaskans are skeptical that lawmakers will ever be responsible spenders, they fail to take note that it is because of legislators that the permanent fund is as big as it is today. Instead of spending money that they could have spent, lawmakers returned $7 billion to the permanent fund. Alaska is a wealthy state the richest in the nation because legislators had the foresight and courage to set aside more than they were required into the permanent fund, which today totals nearly $26 billion. With $26 billion in the bank, Alaskans can't cry "poor, poor us."

That's why the permanent fund must be part of the solution to help balance the budget and why the percent of market value proposal being put forth by the Alaska Permanent Fund Board of Trustees is the best avenue to protect the fund and benefit all generations of Alaskans.

Other elements to the equation should be controlling the cost of government, committing to resource development over the long haul and instituting reasonable taxes and fees. Alaskans need to tell legislators loud and clear that they've had enough cuts. Lawmakers, on the other hand, need to provide evidence that new revenue will be used for the primary responsibilities of government: education, public safety and roads.

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