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Alaskans are smart enough to fix the state's budget woes

Posted: Tuesday, May 18, 2004

For the past few months, a group of varied individuals from across Alaska has been meeting in Juneau to discuss the fiscal issues facing our state. Their virtually unanimous consensus is that the best immediate remedy to our situation is for adoption of the "percent of market value" management plan for the Alaska Permanent Fund, with an even 50/50 splitting of earnings between dividends, which will benefit all Alaskans, and state services, which also will benefit all Alaskans.

Obviously, I'm not talking about the Alaska Legislature. The group I'm talking about was a class of students who have been meeting since mid-January in Public Budgetary Process, a course in the University of Alaska Southeast master's in public administration program. Our experiences illustrate that, if given honest, open debate, a group of Alaskans will agree that POMV management with a portion going toward state services represents a positive first step for Alaska's future.

Instructor Jim Powell gave us our single major assignment on the first day of class: create a long-range fiscal plan for Alaska. We were free to argue that there is no fiscal problem. We also were free to argue that there is, and to use whatever tools we liked to solve the problem - so long as we could explain and defend these tools given legal, social and political realities.

Students ranged widely in age, location, employment and political leanings. Every class featured lively debate over current budget issues, often pulled out of the day's headlines. Guest speakers of all political stripes deepened our understanding of these issues, and demonstrated that, ultimately, policy judgments will be determined by one's values and vision.

We presented our plans in the last weeks of April. Of the 25 students, not one could defend the idea that the state isn't in urgent need of a fiscal fix. Neither did any student propose cutting state government any deeper, as we all recognized that further cuts will likely cripple Alaska's economy and quality of life.

It was up to each of us to therefore propose viable ways to raise revenues and end the state's addiction to its dwindling savings account, the Constitutional Budget Reserve.

Students presented plenty of inventive ideas, from turning the Al-Can into a toll road to instituting a statewide lottery. Several called for more aggressive development of Alaska's resources, and for modifying the state's corporate tax structure. Most students recommended implementation of a progressive income tax; only one proposed a statewide sales tax. Everyone, however, recognized that none of these measures alone could come close to balancing the state's budget. Again and again, POMV management of permanent fund earnings and allocation of a portion of these funds to state services surfaced as the critical foundation of almost every student's long-range fiscal plan.

A final poll of the class demonstrated that every student would vote to implement POMV and tap earnings to help balance the state budget, although two students said they'd insist that this action be accompanied by a progressive income tax plan. These students recognized that tapping permanent fund earnings would be inherently regressive, hitting low-income families and individuals hardest. Others agreed, but thought it more important to take some action now and develop other necessary and fair measures later.

With such strong consensus despite our striking diversity it is rather mystifying why the Legislature could not reach similar consensus. Even with their approval Alaskans would still be required to vote the POMV management plan into action. We're left with the impression that our Legislators simply don't believe Alaskans are smart or well-informed enough to make the right decision.

Our experience suggests otherwise. Our experience suggests that, if given a chance, Alaskans will study up on their options, discuss them with neighbors and friends, and make an informed decision free of political constraints. I believe that decision will be in support of implementing POMV - because it protects the principle of the permanent fund, stabilizes and assures future dividends for all Alaskans, and can ultimately benefit us all by supporting responsible and responsive government services.

• Tony Newman is a student in the master's in public administration program at UAS.



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