A legislative panel moved toward a long-range fiscal plan for state government this morning, but even members said it was only a baby step.
The House State Affairs Committee approved a bill to change the formula for allocating the state's oil revenue to the Alaska Permanent Fund. Rep. Norm Rokeberg, an Anchorage Republican, offered the same bill two years ago, but its provisions were lost during debate over a long-range plan, he said.
"If you don't like taxes, you should vote for this bill," Rokeberg said in an interview. "It's the least this Legislature can do."
With dwindling production, the large oil fields on the North Slope contribute less to the state's general fund, which pays for government operations. Therefore, Rokeberg said, more royalty revenue must be diverted there from the newer, smaller fields, which have been paying a greater percentage of their revenue to the permanent fund.
Under the bill, the state would gain $40 million next year by putting 75 percent of all oil revenue into the state general fund to pay for government. That's the highest amount allowed by the constitution, which requires that 25 percent go into the permanent fund. Now, by law, there's a 50-50 split on some of that revenue.
An analysis of the bill done by the Permanent Fund Corp. shows no change in dividends until 2006, when projections are for a $10 dip per check. Through 2011, an Alaska resident who received every dividend would get a total of $90 less, according to the corporation. Meanwhile, the state would realize $333 million in additional revenue, based on current estimates of oil prices.
House Majority Leader Jeannette James, a North Pole Republican, said the money generated by Rokeberg's bill would reduce next year's budget deficit, now estimated between $400 million and $500 million, by no more than 10 percent. "This has no effect whatsoever on whether we need a broad-based tax."
The dwindling Constitutional Budget Reserve is used to plug gaps now, but the $3 billion fund, which comes from proceeds of litigation against the oil industry, is headed for depletion in about five years.
And things could get even worse with downturns in the stock market, James said. "We've been very fortunate over this past 10 years with what I call a runaway stock market," increasing the value of permanent fund investments, she said.
State Affairs Chairman John Coghill, a North Pole Republican, said he wouldn't stand in the way of Rokeberg's bill but doubts whether increasing revenue is the answer to the budget gap.
Rokeberg said he knows his bill isn't a complete solution. But given many legislators' reluctance to tackle the issue, particularly in the Senate, an incremental approach is worth trying, he said.
Bill McAllister can be reached at firstname.lastname@example.org.