Fiscal gap road show hits Juneau

Rep. Hawker says Republicans, Democrats need to find common ground on budget

Posted: Friday, December 12, 2003

As head of the state House Ways and Means Committee, Anchorage Republican Rep. Mike Hawker's mission is to craft a long-range fiscal plan for Alaska.

But in order to do it, he says Republicans and Democrats will have to find a common ground on issues such as taxes, budget cuts and use of the Alaska Permanent Fund.

"There is plenty of fodder out there in the bloodsport of politics," Hawker said. "But the fiscal stability of the state is too important an issue to sacrifice in that arena."

On Thursday, Hawker talked taxes, budget cuts and the fiscal gap with Juneau citizens, the Juneau Assembly, the Juneau School Board and the state and local chambers of commerce. Hawker's visit to Juneau is one of several similar meetings held around the state this fall.

"I believe more than 50 percent of the people recognize the problem," Hawker said at a mid-day meeting with Mayor Bruce Botelho and members of the Assembly.

But like many lawmakers, Hawker noted that it is unlikely the Legislature will pass a broad-based tax this year such as a statewide income or sales tax.

Last session, the Legislature reduced government services and cut state jobs but passed few taxes. Gov. Frank Murkowski vetoed $138 million from the state budget, including $47 million in Longevity Bonus payments to seniors. The cuts also included $37 million in funding to municipalities. Juneau took a $1.06 million hit to its annual budget due to the municipal funding cuts.

In addition to new taxes and cuts, the Legislature had to use about $400 million from the $1.9 billion state savings account to cover this year's fiscal gap.

Botelho said development of a long-range fiscal plan for the state is the city's primary concern. This could be done through a combination of various proposals, such as a statewide income tax or using some of the earnings of the Alaska Permanent Fund, he said.

"We're maxed out at what we can do at the local level," Botelho said. "That has a direct impact on the quality of life here."

He noted that the Juneau School District might cut 26 teachers next year to balance its budget.

Juneau Finance Director Craig Duncan said small businesses in Juneau want long-range security, noting that in the last few years attempts to move the Legislature to the Mat-Su and fiscal instability statewide has had a chilling effect on the local economy.

Botelho has formed a Capitol Planning Committee to secure revenue bonds to build a new legislative hall.

But Anchorage Democratic Rep. Max Gruenberg, who attended the meeting, said in order to get a new Capitol built Juneau must "make the state an offer it can't refuse" - pay for the construction itself.

"His view is that Juneau's got to pay for it," Botelho said. "My concern is this is a temple of democracy for the state, not the city of Juneau."

Botelho said the Alaska Municipal League, an organization that represents more than 100 Alaska cities and boroughs, supports a statewide income tax and adopting a new method of managing the $26 billion Permanent Fund.

The proposed method, known as the Percent of Market Value approach, would limit the payout to no more than 5 percent of the average value of the entire fund over a five-year period. Now dividends are based on the realized earnings of the fund.

POMV would ensure payouts in good years as well as bad, and half the 5 percent payout could be used to help pay for government services.

Hawker and Juneau Republican Rep. Bruce Weyhrauch also support the POMV method to help cover the deficit.

Weyhrauch also plans to submit a bill this session that would link the Permanent Fund dividend program to resource development.

Under the "Alaska Resource Kicker" proposal, dividends would decrease if there is a decline in revenues from resource industries or from corporate taxes and business license fees.

Likewise, dividend checks would go up if business indicators increase.

Weyhrauch said linking dividends to development would put people in touch with the state economy.

"It removes the disconnect between the Alaska economy and the dividend," Weyhrauch said.



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