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Push for fiscal plan to begin

Caucus seeks action in 2002

Posted: Friday, June 01, 2001

Supporters of a long-range fiscal plan for the state are getting ready to tell the public that it's later than they think.

Members of the Fiscal Policy Caucus in the Legislature and Alaskans United, the group that successfully organized opposition to the proposed property-tax cap last year, are planning months of public education about the state's ongoing fiscal gap. The intent is to build support for legislative action in 2002.

But the groups are mindful of the outcome on Sept. 14, 1999, when more than 80 percent of voters rejected a plan by the Legislature to use earnings of the Alaska Permanent Fund to finance government.

So this year, the initial push will be to lay out the state's budget problem in as many forums as possible.

"We do need to convince the public there's a problem first," said Rep. Lesil McGuire, an Anchorage Republican, during a recent teleconference among proponents of a plan.

"The public has to be able to see it in a context," said Kevin Ritchie of Juneau, executive director of the Alaska Municipal League, which represents local governments.

It hasn't been decided whether any proposed solution ultimately will be identified, Ritchie said. If Alaskans United goes ahead with a statewide public opinion poll later this month, the question won't be whether there's support for particular taxes, he said. Instead, respondents will be asked what they need to know in order to make a decision about the state's fiscal future. An interactive Web site being planned will allow citizens to try out various budget-balancing options and see what might work.

Ernie Hall of Anchorage, the chairman of Alaskans United, said the idea is "to engage in a conversation with the citizens of Alaska." Similar to the campaign against the tax cap, the group will reach out to parent-teacher associations, chambers of commerce and other grassroots organizations to get neighbor-to-neighbor conversations going.

One emerging strategy is to make comparisons with a family budget. A first draft of a possible flyer asks what a family with a $100,000 inheritance would do if the primary wage earner had to take a lower-paying job. The options: Spend the inheritance and worry about the future later; sell the car, defer repairs on the house and take the kids out of college; or take steps to earn more money, cut expenses where practical and use only investment income from the inheritance.

"It is not a hard decision," the draft says. "Most families would choose option 3. But right now Alaska does 1 and 2 by not deciding on new revenues and by making short-term decisions like allowing many of Alaska's roads and schools to deteriorate from lack of maintenance."

Alaska will be taking a lower-paying job in the sense that the Constitutional Budget Reserve is running out. That fund, now just under $3 billion, will be drawn down by about $630 million in the fiscal year beginning July 1.

At that rate, the reserve would be gone in less than five years, even if state spending didn't increase. Then lawmakers would be faced with making severe budget cuts, imposing major taxes and possibly using earnings of the permanent fund, eventually leading to reduced dividends. Even a natural gas pipeline wouldn't generate enough revenue to put off tough choices.

It's not clear that there is the legislative will to enact new taxes.

A bill to raise the alcohol excise tax stalled in this year's legislative session, despite high-profile fatalities from drunken driving accidents. No hearing was held on an income tax bill offered by Rep. Bill Hudson, a Juneau Republican and co-chairman of the Fiscal Policy Caucus.

"I, for one, do not want to leave the next session without action on some revenue-generators," Hudson said. "We have to take action next time around."

Bill McAllister can be reached at billm@juneauempire.com.



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