The following editorial first appeared in the Peninsula Clarion:
The commissioner of the state Department of Revenue was in Kenai this week to give a presentation on the scope of Alaska’s fiscal crisis — and looking for input from Alaskans to address the issue.
Randall Hoffbeck spoke to a joint meeting of the Kenai and Soldotna Chambers of Commerce, and when it comes to looking for ways to ensure expenditures don’t outpace revenue, a roomful of business owners is probably a good place to start.
Hoffbeck noted that the biggest challenge is “convincing people that we actually have a problem.”
Indeed, Alaskans have gotten used to a relatively low tax burden, no state income tax and a nice check courtesy of the Alaska Permanent Fund every fall. Part of the challenge in understanding the problem lies in grasping the scope of a $3.1 billion deficit, but the other part of the challenge lies in just how fast the crisis unfolded. It would have been one thing to see state revenue dwindle over the course of a few years, with a gradual decline in oil production here and a small drop in prices there.
But the current crisis, while it didn’t crop up overnight, certainly developed at a much quicker pace than a state government is equipped to deal with. On July 24, 2014, the price for a barrel of North Slope crude was $106.86; on Tuesday, it was $56.69.
Hoffbeck said there is not yet a plan in place to address the deficit, but that efforts to balance the budget would focus on four areas: continuing with government budgetary restraints, initiating “taxes impacting individual Alaskans,” altering oil and gas taxes and credits, and “strategic” use of state assets. In response to a question, Hoffbeck told the chamber audience that the administration is asking people for suggestions.
That comment reminds us of another chamber meeting back in May, when the peninsula’s state legislators shared their thoughts on the then-ongoing special session and budget debate. At that time, legislators invited constituents to call their offices to share any ideas for things they might be missing. Legislators have also noted that they get a lot of input on what programs should be funded, but very little on what we’re willing to do without.
Likewise, during a recent conference in Fairbanks, attendees ranked nearly every state government service a priority.
In the coming months, something’s got to give. There just isn’t enough money in the state to make up for the drop in oil and gas revenue.
With that in mind, we encourage peninsula residents to take public officials up on their invitations to provide feedback.
The administration’s “Sustainable Future” information, including a revenue and expenditure model, may be found under the “Priorities” tab on the governor’s web page, gov.alaska.gov.
The Legislature needed multiple special sessions to hammer out a compromise to fund state government for the current fiscal year, which began July 1. Next year’s budget is going to require even tougher choices, but at least the state is going into the process with an understanding of the severity of the problem. Now its up to Alaskans to engage in the process, too.