Empire editorial: State needs leadership to solve the budget gap

Posted: Wednesday, March 31, 2004

It's ironic that the goose that lays this state's golden eggs - oil money - is also one of the biggest hindrances as the Alaska Legislature wrestles with what could become a $700 million budget deficit in the next five years.

High oil prices, which are only getting higher, are temporarily providing the state with additional income and have taken some of the urgency out of eliminating a growing budget deficit. Nonetheless, legislators are studying what many Alaskans consider to be desperate measures. Among them are tapping into a portion of the Alaska Permanent Fund, reinstating an income tax that has been nonexistent since 1980, a spending cap and even a sales tax.

Solutions won't come easily for Gov. Frank Murkowski and the House and Senate members with whom he must work to close the budget gap, and what is ultimately implemented may not be popular among Alaskans. Suffice it to say there are plenty who favor any number of budget cuts as long as their programs, projects and services aren't trimmed. Similarly, many don't mind tax hikes or fee increases as long as the effect on them is minimal.

In the final analysis a mix of measures will most likely be needed to balance the budget, and that isn't going to happen this year. Use of some permanent fund monies may be required, as will new tax measures and limits on spending.

Using a portion of the permanent fund for government services and programs, while guaranteeing the payout of annual dividends for Alaska residents, will surely need to be part of the equation for a balanced budget. How the plan is structured, however, will surely prove to be a challenge for lawmakers.

New taxes, an income tax in particular, may also prove to be a tough sell to Alaskans, along with spending limits, depending on the areas and depths of cuts.

We, as Alaskans, need to understand that our state is in the throes of the same kinds of budget constraints that many other states are experiencing. Many of those are slashing essential programs such as education and health care as they struggle to reign in deficits much larger than ours.

Balancing Alaska's budget will take time, creativity, cooperation and leadership on the part of our legislators. Without it - and without some patience and understanding from the rest of us - our state could find itself facing increasingly difficult and painful decisions.

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