State government must address issue of long-term fiscal planning

Alaska editorial

Posted: Wednesday, December 26, 2001

This editorial appeared in Sunday's Fairbanks Daily News-Miner:

In recent weeks, Gov. Tony Knowles has been saying a lot about his proposed fiscal 2003 state budget and the increases that will be part of it. What he hasn't been saying much about is how he proposes paying for them.

Knowles' overall $7.3 billion budget includes somewhere in the neighborhood of $180 million more spending than the 2002 budget, including a $17 million increase for the University of Alaska system, $31 million in additional spending for elementary and secondary education, and a significant investment in anti-terrorism measures.

Knowles said he will outline a specific plan to increase state revenues when he addresses the Legislature in late January, although he has said it will include broad-based taxes and user fees.

At this point, it's difficult to argue too much with any of the proposed increases. For example, additional education funding would no doubt be welcomed by educators and school administrators, and in light of the Sept. 11 terrorist attacks and some of Alaska's unique vulnerabilities - such as the trans-Alaska pipeline - specific measures for homeland security are probably a good call.

However, the harsh fiscal reality is that the state could be heading for difficult times if our leaders proceed without sound planning and good spending choices.

The state's Constitutional Budget Reserve, which was started as a savings account of excess oil revenues, will be down to $2.3 billion at the end of this fiscal year. Lawmakers have been using that savings account to make up the shortfall between state spending and revenues - this year, $915 million is expected to be needed in order to fill a shortfall. Knowles' 2003 plan calls for another $1.2 billion from the reserve.

The best case would have been for Knowles to talk about how he wants to cover these increases at the same time he unveiled his budget proposal. Certainly, all of these increases will be welcomed by the various segments that would benefit from them. However, both the governor and the Legislature have some hard work ahead of them as they lay out this budget and talk about our state's overall financial future.

Instead of simply counting on the Constitutional Budget Reserve - which won't be around forever - the state must address the issue of long-term fiscal planning. It's an issue that both the governor and the Legislature have failed to push to the forefront, but it is one that cannot be ignored much longer.

If Knowles had set the parameters of his budget proposal beforehand, it might have given the discussion focus. Instead, the door is open for plenty of partisan rhetoric that isn't likely to move the debate along.

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