Again facing a $2.5 to $3 billion deficit, and ahead of the 2018 elections, what’s ahead for the next 90 days? House Speaker Bryce Edgmon, D-Dillingham, spoke with KDLG before heading to Juneau.
The second session of the 30th Legislature gaveled in Tuesday. How to sort out the state’s massive, multi-billion dollar deficit will again be the top priority, said House Speaker Bryce Edgmon.
“Coming up with the components of a long term sustainable plan that will help us balance the budget, help us keep essential services in place, and help us really create a pathway for a prosperous Alaska,” he said during an interview with KDLG last week. “Unfortunately, it’s an election year, so you have additional sensitivities attached to the fact that it’s a political season.”
Alaska’s governor is mandated to put a budget proposal up about a month before lawmakers come back to session. Published in December, Bill Walker’s $4.7 billion dollar operating budget responds to public safety concerns with $34 million in increased funding prosecutors and state troopers, including 20 new positions. Overall, Walker cuts 217 additional state jobs, on top of the 2,800 positions cut over three years. (The FY 2019 budget proposed by Walker is slightly less than the FY 2018 budget of $4.8 billion.)
Walker is also again asking lawmakers to adopt new revenues, this year calling for a three year, 1.5 percent payroll tax to generate an estimated $800 million dollars. His administration has failed to get support for previous tax proposals, especially with the Republican-controlled Senate. It seems unlikely that this latest iteration will go anywhere, either.
“I wouldn’t say it’s a non-starter, but I think the Senate has been pretty clear that new revenues aren’t necessary,” said Edgmon, referring to recent comments by Senate President Pete Kelly, R-Fairbanks.
"I don't want to get to yes on a plan that takes money out of the private sector," Kelly was quoted in the Anchorage Daily News in early January. "My goal this year is to get to no. If someone brings up the taxes, I'm getting to no."
Edgmon, who took over as Speaker when a majority Democrat coalition wrested control of the House away from Republicans in the 2016 election, calls that position a “head-scratcher.”
“If you look at things going forward, there’s clearly this huge gap and there’s also, for the first time in Alaska’s history, we’ll now be using earnings from the Permanent Fund to pay for part of state government.”
The idea of taking some $2 billion in earnings that would have gone into the Permanent Fund, at a time when the fund is seeing record earnings, is something Edgmon believes many are uncomfortable with. But lawmakers have recognized the fund is producing the state’s largest revenue, at least for now.
Republicans in the Senate have pointed to oil prices that have climbed back to nearly $70 per barrel and the promise of new production, including in ANWR, as reasons to slow down a comprehensive overhaul of Alaska’s finances. The Trump administration’s pro-drilling policies have wide support in Alaska, including with Democrats and Bill Walker.
“I definitely share in the optimism,” said Edgmon, “but the question really is how do we get from here, today, to five, 10, perhaps even 15 or 20 years down the road when that additional development comes online. And how do we protect essential services, and how do we balance our budget in a way that protects the Permanent Fund and the Permanent Fund Dividend?”
Last year the House backed the idea of creating new taxes as one way to fill the gap.
“Our coalition thinks to have new revenues will help alleviate some of the pressure on the Permanent Fund, help keep the Permanent Fund Dividend healthy and intact, and also allow us to have a bigger capital budget which the private sector throughout the state is clamoring for.”
As to the Permanent Fund Dividend check paid to Alaska residents each year, Edgmon said the House differs with Walker, who has again proposed capping the check at $1,216 per person.
Where else Alaska might drum up new money was a question posed by DHS senior Logan Ito, a student in KDLG’s broadcasting class.
“With Alaska’s income coming mainly from oil, and those prices dropping, are there any other natural resources that citizens of Alaska should know of that can help close the gap of this deficit?” he asked.
“A great question,” said Edgmon. “I would answer it by saying that in fact the majority of Alaska’s revenues today come from the Permanent Fund itself. At one point, Alaska’s state government was funded at the 90 percent level from oil revenues. Today that number is more like 30 percent. Maybe it gets up a little to 35, maybe 40 percent this year.”
In terms of looking elsewhere, Edgmon pointed to growth in the tourism and healthcare sectors that is promising, and the mining industry that keeps “chugging along.” But Edgmon, who for three years has talked state income and expenses with any person or group who will give him the time, again said there is no other multi-billion dollar silver bullet out there.
“Any change I see in the foreseeable future really is more in the margins in terms of bringing income into Alaska in a way that would help satisfy that big budget gap we have,” he said.
Governor Walker called lawmakers back to four special sessions in 2017. This year, he has proposed penalizing them by docking their pay if a budget is not passed in the 90-day deadline set by Alaskans in 2006.
Edgmon has filed to run for reelection in 2018, and so far has no challengers. William Weatherby, a Republican from King Salmon who rain in 2016, has indicated an interest in challenging the incumbent again but has not yet filed. Senator Lyman Hoffman, D-Bethel, has filed for reelection, and also has no challengers yet, according to the state Division of Elections website.
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