Plan may include taxes, PFD cap
ANCHORAGE - More than a third of Alaska's 60 legislators have agreed to use new revenue proposals - including a cap on permanent fund dividends, a sales tax and an income tax - as a launching pad for coming debates about the state's financial hole.
None of the lawmakers who make up the Fiscal Policy Caucus backed the entire plan at a Saturday meeting in Anchorage. But they decided something that lists specific potential measures is needed to give the public and the Legislature a starting point for debate over Alaska's gap between income and spending.
"I characterize it as a significant milestone toward a fiscal policy by the state of Alaska," said Rep. John Davies, a Fairbanks Democrat.
But House Finance Co-Chairman Eldon Mulder, an Anchorage Republican who is the chief budget-writer in the House, said that adopting a long-range fiscal plan in the 2002 session is "a long shot," although he does expect an increase in the alcohol excise tax.
Under the draft, permanent fund dividend checks would be limited to $1,250 for every Alaskan, down from $1,850 this year. Surplus investment earnings of the fund, after dividends are paid and the principal inflation-proofed, would be used for state services.
The plan calls for a 3 percent state income tax and a 2 percent sales tax.
In addition, alcohol and gasoline taxes would increase by 5 cents per drink and 5 cents per gallon respectively.
An employment tax of $100 a year would be used for schools.
The group agreed on a "visitor tax" of $25, aimed mostly at cruise ship passengers, said Rep. Beth Kerttula, a Juneau Democrat. Also, oil and gas production taxes would be raised to bring in an additional $100 million annually.
The proposal also would limit growth of state services to 2 percent each year, no matter the inflation factor or increases in population.
Members of the Fiscal Policy Caucus, such as Rep. Drew Scalzi, a Homer Republican, emphasized that the proposal is only a framework designed to elicit comment, and several said they don't want all new revenues implemented within a single year because it would be too hard on the economy.
While not every caucus member necessarily would vote yes on every revenue item on the list, "Nobody would get up and leave the room on any one of these particular items," Kerttula said. Members agreed they would meet again before dropping any of the proposals, she said.
Caucus members said that if the Legislature does not address the budget shortfall soon, the state's reserve account will be gone and the only significant revenue choice available will be from the Alaska Permanent Fund.
But Rep. Hugh Fate, a Fairbanks Republican, said he wants to make sure that revenue measures are not all of the solution. State spending has to be controlled, he said.
The Fiscal Policy Caucus includes few senators and no members of the majority leadership.
Senate President Rick Halford, a Chugiak Republican, said Saturday of the draft: "There are certainly plenty of things there for everyone to dislike."
Halford said he cannot support limits on permanent fund dividends. The dividends are an egalitarian way for Alaskans to benefit as owners of the states resources, he said.
But, "For the past 20 years we have fostered this notion that you can get something for nothing," said Rep. Andrew Halcro, an Anchorage Republican.
The amount of the state's budget shortfall varies each year, depending on oil prices. This year it is expected to be around $900 million, a projected amount that has been increasing as prices have fallen.
To balance the books the state uses its roughly $2.8 billion Constitutional Budget Reserve, but that now is projected to be gone in 2004.
Deputy Revenue Commissioner Larry Persily estimated that the draft revenue measures forwarded Saturday by the Fiscal Policy Caucus would delay exhausting the reserve account until late 2008.
Empire staff writer Bill McAllister contributed to this article.