Fiscal plan tops '02 priority list

Posted: Monday, January 14, 2002

Juneau's trio of legislators each named the same issue as a top priority this session: passage of a long-range financial plan to pay for state government.

But they differed on some elements of a plan proposed by the Fiscal Policy Caucus, led by Rep. Bill Hudson, a Juneau Republican.

Hudson supported nearly all elements of the plan, saying it would avert a fiscal calamity in 2004, when a state savings account that funds budget shortfalls is expected to run dry.

The Legislature eventually will tap Alaska Permanent Fund earnings to pay for state government if lawmakers fail to pass a plan that raises new revenue, said Hudson, co-chairman of the Fiscal Policy Caucus.

"If we continue to do what we're doing, it will cost people not a little bit of their dividend, but the entire dividend," said Hudson, who figured the Fiscal Policy Caucus plan would raise nearly $1 billion annually.

Hudson presented the plan to the GOP-led House majority on Sunday, but Republicans were divided on the revenue proposals, said House Speaker Brian Porter, an Anchorage Republican.

Here are the proposals and positions of Hudson and Democrats Sen. Kim Elton and Rep. Beth Kerttula:

• Levy a $25 head tax on cruise passengers to raise $17 million annually: Hudson was undecided on this proposal. Elton supported it. Kerttula tentatively supported it, saying "I want to hear the actual figures behind how the industry has been doing - they really took a whack after Sept. 11."

• Levy a personal state income tax to raise $270 million annually: Hudson supported the income tax, saying it would cost each household the equivalent of one permanent fund dividend per year. Elton also supported it. Kerttula tentatively supported it but only if the whole plan goes forward.

• Levy a 2 percent year-round state sales tax to raise $200 million annually: Hudson was undecided but leaned against it because Juneau already has a 5 percent sales tax. Elton did not support this element for the same reason. Kerttula supported the tax but wanted exemptions for seniors, food and communities already assessing a sales tax.

• Cap permanent fund dividends at $1,250 each to raise $182 million annually: Hudson supported this element. Elton was undecided. Kerttula would support it only if the whole plan goes forward. The plan also proposes using $127 million annually from the fund's excess earnings after inflation-proofing the fund and paying dividends.

• Increase motor fuel tax by 5 cents a gallon to raise $15 million annually: Hudson, Elton and Kerttula supported this proposal.

• Increase alcohol tax by 5 cents a drink to raise $15 million annually: Hudson supported this element but only if the whole plan goes forward. Elton said the tax hike was too low and wanted an increase of 25 cents a drink. Kerttula supported the proposal but favored a quarter-a-drink increase.

• Levy an annual employment tax of $100 per person to raise $38 million annually for school construction projects: Hudson supported this proposal, saying Alaskans would pay the tax in two $50 installments deducted from their paychecks. Elton was neutral on this element. Kerttula supported it.

• Reduce state spending: Hudson supported this proposal. Elton did not rule out further reductions but noted past cuts have put state spending "as close to the bone as we can possibly be." Kerttula echoed Elton's comments.

• Increase taxes on the oil industry by roughly 20 percent to raise about $100 million annually: Hudson supported the concept of raising more money from the oil industry but was undecided about how to do it. Elton and Kerttula also supported the concept.

• Deposit 25 percent instead of 50 percent of all mineral royalties into the Alaska Permanent Fund to raise $33 million annually: Hudson and Elton supported this element. Kerttula supported the proposal but only if the whole package moved forward.

The Juneau delegation also wanted funding for a new high school, but Hudson was not highly optimistic about securing it this year because the project is low on a state priority list of school needs.

"I'm suggesting it would be a long shot, but I will get in there and fight to make certain Juneau's interests are represented," said Hudson, who serves on the House Finance Committee.

House Speaker Brian Porter has said the GOP majority was crafting a moderate bonds package for school construction. Elton was optimistic the Juneau school would be included in that package.

"The people are going to have to vote for the debt package, which means you're going to have to have regional representation, which I think augurs well for including the Juneau high school," Elton said.

Other priorities mentioned by some Juneau lawmakers included education funding, money for a joint recreational facility for the National Guard and University of Alaska Southeast; funding to replenish a reserve account for the Alaska Marine Highway System; funding for a new UAS fisheries facility at Lena Point, and money to bring state ports and harbors in Juneau up to code so the city may assume ownership.

Kathy Dye can be reached at

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