To applause from most, the governor fulfilled his promise to reduce state spending. That applause was amplified by legislative reluctance to enact a broad-based sales tax. The only "spoil sports" not cheering were those directly impacted by program cuts and a few alarmists like myself who believe those actions, and non-actions, were little more than stutter steps on our inexorable march toward the brink of that yawning fiscal gap.
While some charge fiscal gap concerns are simply bleats from "free loaders" or "flaming liberals," even the most ardent budget cutting conservatives agree that eventually we'll require some sort of broad-based tax to bridge that fiscal gap. The question then is when? When will sufficient cuts be made to stiffen legislative spines enough to induce them to pass a broad-based tax? If politicians rely on polls instead of prudence, that time will never come. After all, a broad-based tax effects everyone, while few perceive themselves as directly benefiting from most state programs. Hence most will always opt for cutting programs affecting others over taxes.
Instead of awaiting public sanction, legislators long ago should have established a bench mark beneath which they would not let things deteriorate before corrective actions would automatically occur. These actions should include both prospective budget cuts and revenue enhancements. The governor, to his credit, senses this and drew a line in the sand as a demarcation point beyond which he would not permit the budget to expand without massive vetoes. The line he drew limited extractions from the CBR to no more than $400 million.
But lines in the sand are not enough. They can be too easily scuffed out by the fumble footed or undetected by the fiscally myopic. Instead of lines, there should be a barrier. A barrier into which, should legislators bumble, their noses will be bloodied. For example, instead of that arbitrary $400 million "line", erect a CBR barrier at, say, $1 billion.
Provide reinforcing steel by passing both prospective budget cuts and taxes, which will be inserted if that barrier is breached; but only to the extent necessary to beef it up to strength the following year. Should other means supplant need for taxes to maintain that $I billion CBR, any broad-based tax that had been triggered should automatically decline. Conversely, if spending is not held in check that tax would escalate as necessary.
But wait a minute! Isn't that the same as Fran Ulmer's so-called "Parachute Plan?" Only in part. The concept outlined above evolved from discussions with Sen. Rick Halford, Fred Dyson and myself. That concept remains sound and its basic elements seem approved by everyone I've talked to. The governor with his "line in the sand" already supports the keystone element of that concept, which is not allowing total depletion of the CBR. (Only those who want to break into the Permanent Fund wish to see that happen). I'm sure the governor would agree with the other two elements as well: 1. If revenue enhancements are required to boost the CBR "rainy day" account back up to health, the least offensive, broad-based tax (affecting others than simply just Alaskans) should be enacted first and 2. Such a tax not be locked in stone, but reduced accordingly once his development scenario provides that required boost. Meanwhile, nothing could restrain runaway spending more than having such a tax hang suspended like a Damocalean sword over legislative heads.
Fran Ulmer, smart lady that she is, immediately saw merit in the above concept. So did Frank's then campaign manager who told me "Frank will love it" and suggested it be called "The Murkowski Plan." I wish it had been. Instead it became known as "Fran Ulmer's parachute plan," purportedly proposing only potential taxes and no budget cuts at all. Naturally voters intent on first cutting budgets were not entranced. However, while any plan the governor might approve in conformance with the above concept might vary drastically from one approved by Fran, I would hope Frank would keep both the baby (CBR) and the bath water.
Simply cool it with a dash of spending cuts and only apply the heat of taxes as necessary to keep that baby kicking
Accordingly, rather than "parachuting" a deluge of new taxes down upon us if the CBR needed replenishing, the governor should unfurl an "Umbrella Plan" that would fend off rain so long as needed , but then again furl up when the sunshine of new development breaks through.
Former Alaska Gov. Jay Hammond lives in Port Alsworth.
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