Gov. Bill Walker called the Alaska Legislature into a second special session to prevent a devastating government shutdown that will start July 1 if a budget is not passed. I would like to be able to say that this is unprecedented, however, in recent years special sessions seem to have become a normal occurrence for the Alaska Legislature.
Our House Majority Coalition continues to work diligently to both avoid a government shutdown and to ensure that the future of Alaska — and for Alaskans — is promising and stable. Thousands of state workers, many of whom are my constituents, go to bed every night worried about the prospect of not being able to go to work on July 3. Millions of tourists, fisherman and others deserve to know that Alaska’s economy is stable and that our state is open for business.
This session, the Alaska House Majority proposed and passed a fiscal plan and a responsible budget. The Senate Majority rejected our plan in favor of a budget reduction plan funded by cutting Alaskans’ Permanent Fund Dividends. The plan our House Majority passed provides a stable basis for funding our state services into the future, and protects public education, public health care, ferry service, public safety and resource management. The budget reduction plan supported by the Alaska Senate Majority relies too heavily on hope: both the hope for an increase in volatile oil prices and on the hope for above average performance from unpredictable financial investments. Our current dependence on oil revenue is unsustainable and is threatening to reduce our available savings to critical levels.
Alaska’s current fiscal crisis is a direct result of some lawmakers who are not willing to make the difficult, yet necessary decisions to protect our economy and our future. Over the last three years, we have spent $13 billion of our savings. We now have approximately $12 billion in our savings accounts. This is tragic and unfortunate because with a fiscal plan, the spent savings could have been earning revenue for Alaskans. The reduction in our savings could have been avoided if the past House and Senate leadership, and current Senate leadership, were committed to identifying the revenues necessary to support critical and essential state services for Alaskans instead of playing politics with Alaska’s future.
With the reduction in oil prices that we continue to see, we are earning just $1.2 billion in oil royalties and taxes. It is unreasonable to expect that state general fund spending for the operating budget can go from $7.8 billion in Fiscal Year 2013 to $4.3 billion in FY 2017 to $1.2 billion in FY 2018 without dramatic negative effects on state services like education, public safety, transportation and health care. The proposed House FY 2018 $4.2 billion general fund budget is a responsible budget that protects Alaskans and the services the state provides to Alaskans. Without a comprehensive fiscal plan we will continue on this same dangerous course until we have no savings left to fill the gap, which by some predictions could happen in as little as three years. Our House budget also provides the statutory $77 million payment for oil tax credits, where the Senate is proposing paying almost $300 million in oil tax credits out of our rapidly dwindling savings. The Senate’s actions also push for cuts to funding for public education that will result in the loss of over 700 teachers across our state.
With a government shutdown looming over the heads of every Alaskan, the Senate Majority claims they will negotiate with the House, but so far their idea of negotiating is to simply say “no” over and over again. The Senate Majority has not offered any suggestions for how we pay for basic state services while we are taking in so little oil revenue. Any fiscal plan for our future needs to include a reasonable restructuring of the oil tax credits and broad based revenue. The Senate Majority continues to focus on cuts and the restructuring of permanent fund earnings. A fair and sustainable fiscal plan requires all Alaskans and industries in our state to step up and be part of the solution. The burden of raising new revenue must be shared fairly among all, and we should also collect revenue from out-of-state workers and businesses profiting from our natural resources. We should not place an undue burden on the poorest Alaskans by only capping the dividend in order to pay for our state budget.
It is time for the Alaska Senate to step up and work with the House to find a genuine compromise to this unfortunate fiscal situation.
• Rep. Sam Kito, D-Juneau, is a member of the Alaska House of Representatives.
