My Turn: Are there enough brave lawmakers?

Posted: Sunday, November 25, 2001

After the five years that the Legislature has been cutting the cost of state operation, Alaskans are complaining about reduced services. People with children want more money, not less, for schools. Fishermen and game guides want more protection and research on their resources, not less. Southeast Alaskans want more ferry service, not less. Interior Alaskans want more road maintenance, not less.

Nobody pays state income tax and only one-third of Alaskans pay a sales tax. In Anchorage, where there is no sales tax, some residents pay less in property taxes than they receive each year in Alaska Permanent Fund dividends. Yet they still complain about high property taxes!

The governor is asking a $17 million boost in the ferry budget to restore service to the 1999- 2000 level, plus money for fast ferries. He plans a $100 million Office of Homeland Security, requiring an additional $54 million in state funds.

He needs an $115 million boost in the state operating budget to meet inflationary costs of current operations. The University of Alaska needs $17 million more for the same purpose.

There is the group that wants to spend money to move the Legislature to Anchorage and the Matanuska-Susitna Borough. They show no plan on how to finance moving 60 legislators, their staffs, their equipment and resource libraries - duplicating Juneau facilities.

Each of those legislators also has pet projects.

The cost of everything - and how to pay for it - comes before the Fiscal Policy Caucus when it meets in Anchorage on Nov. 30 and Dec. 1. The caucus is co-chaired by state Reps. John Davies, D-Fairbanks, and Bill Hudson, R-Juneau.

With the cost of state operations cut over the past five years, there still is a budget gap of $650 million to $750 million, depending upon how the oil price fluctuates. To cover state expenses, the budget reserve account of $2.6 billion will be exhausted in three years. That means the Legislature should act in its next session to have more money flowing to the state treasury within three years.

The options?

It is estimated that reinstating the individual income tax will bring in $250 million annually. Its one advantage is that seasonal non-residents contribute for services they receive.

Surplus permanent fund earnings won't exist without legislative changes and a stock market surge.

The $15 million that a $50 school tax could bring in hardly covers the cost of instituting and collecting all of the new taxes.

A cruise ship passenger tax might bring in up to $30 million but more likely much less because the cruise ship industry is hurting during the current national and world economic slump.

Put more taxes on the oil industry? Not if we expect more oil exploration and production in Alaska.

Put more taxes on the timber industry? What timber industry? The state has lost up to $10 million a year it once received - and delivered to communities - in stumpage fees. The state lost corporate income tax, local communities lost sales and property taxes when timber companies left Alaska.

Increase taxes and fees paid by the fishing industry? No way in a market where the state must provide relief funds for some regions.

We might go back to Alaska's first industry (after Russian fur harvesting), mining. Like timber, it's shrinking because of world market conditions and environmental complaints.

A state sales tax, with exemption for those areas with a local sales tax, is a remote alternative. We say remote because more than one-half of the legislators come from non-sales tax areas.

Pretty bleak, isn't it? Not at all.

Instituting a little of everything will help but the greatest help would be to quit demanding new programs like moving the Legislature, buying high-speed ferries and creating new departments when existing ones can handle the job.

Finance capital projects with bond issues. The current $100 million to $250 million in annual capital spending could finance bonds for projects that would bring business (tax revenue) to the states.

Encourage the university to find programs and products that bring revenue to the state.

Encourage coastal communities to form port authorities that can build and operate more efficient ferries.

It will take courageous lawmakers to put a fiscal plan into effect legislatively and avoid putting it on a ballot. (They can vote on bonds.) No one votes to increase his or her taxes, just the other guy's.

Are there enough brave lawmakers?

Williams is retired publisher of the Ketchikan Daily News and a former member of the University of Alaska Board of Regents.

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