Gov. Frank Murkowski is pushing Alaska's senators to agree on a fiscal plan before this year's legislative session ends on Tuesday, and he's hinted he could call a special session to keep their noses to the grindstone if they don't. The apparent death of a proposed spending limit Thursday doesn't bode well for a resolution, but lawmakers should keep at it. Murkowski's right on this one: This session is much too important to all of us for lawmakers to come up short on the most critical issue they've faced since convening.
That said, the prospects for the Legislature finishing this session with any sort of fiscal plan in place don't look promising.
In the past several days the governor and the Legislature have talked about using a portion of Alaska's sacred permanent fund to help fund state government, passage of new or additional taxes, cuts in spending, and governmental reform to eliminate chronic budget shortfalls. The trouble with that is that lawmakers didn't spend enough time or effort on those potential budgetary remedies early enough in the session to accomplish anything.
Now, as the session draws to a close, the revenue issue of substance is whether to go along with the governor's call to give voters the chance to decide whether a portion of the permanent fund can be tapped to pay for state government. The governor's desire to let the people decide is admirable, but it seems unlikely that Alaskans, as a whole, will be willing to monkey with what so many have come to consider an entitlement.
Rather than voting on a change in the permanent fund, most Alaskans would have been more receptive to other measures, a state income tax or a 3 percent sales tax among them. That fact was borne out in a March poll conducted by the Alaska Municipal League.
In the poll, 23.6 percent of respondents said they strongly supported a statewide sales tax of 3 percent and another 22.8 percent said they mildly supported the idea; 34 percent said they strongly opposed the tax. Relative to a 3 percent income tax, 31.5 percent of respondents said they strong support the idea and 18.8 percent mildly supported it; 34 percent strongly opposed it.
The most telling figures in the poll, however, are those that say 35.5 percent of respondents strongly agree with some sort of broad-based state tax and another 30.2 percent mildly agree; 18 percent strongly disagree.
Even before the 2004 Legislature convened, Murkowski outlined a budget that proposed new revenue streams such as a head tax for cruise ship passengers and independent travelers, higher tobacco taxes, hikes in taxes on guided tours and proposals for a state sales tax and a 12-cent increase on the state gas tax. Those measures received little attention as the governor and lawmakers alike began eyeing changes to the permanent fund.
This week Murkowski warned lawmakers of a pending economic bust if his permanent-fund proposal isn't passed, but it appears members of the state Senate aren't heeding the call in light of record oil prices. The high price of oil may have come just in time to create a false sense of security for legislators, thereby diminishing any sense of urgency to act on a fiscal plan.
Where does all of this leave us? Well, it almost assuredly is too late for lawmakers to consider new revenue options such as new or increased taxes, so that leaves us with the permanent fund. The governor seems convinced the voters of this state will approve use of the fund to pay for government services, but there certainly is no guarantee of that. State senators may favor a formula for how to spend any permanent fund monies that are tapped into, but that measure may not be acted on before the Legislature adjourns, and that could mean there will be no permanent-fund vote in November.
The best solution is for the Senate to act on the fund proposals and put the permanent-fund issue into voters' hands. If the measure passes, the state will have about $650 million more for state and city services. If it fails, the Legislature will get to start anew with other alternatives early next year. It's a shame, however, that this legislative session appears to have come and gone with so little done for Alaska's economic future.