| January 25, 2017
As we end our first full week of the 30th Alaska Legislature, it is a good time to update everyone on the start-of-session activities, as well as mention some community-related items.
Sustainable Fiscal Plan
The precipitous drop in oil prices in recent years has created significant budget deficits for Alaska. Over the last three years, there has not been any progress on moving our state towards a fiscal plan. The Capital Budget has been cut significantly, and the Operating Budget has been cut significantly during each of the last three years. We have paid for the budget the past three years out of our savings account which was once substantial ($13 billion), but is now limited (Approximately $3.5 billion is anticipated to be available for FY2018).
Despite significant cuts to Operating Budget spending, our state still does not have enough revenue to cover the cost of providing essential services for Alaskans (see graph). With a $3.5 billion deficit, there is no way to cut our way to prosperity. It is past time to implement a stable, sustainable, and balanced budget. Without a comprehensive plan that addresses spending as well as revenue, we will deplete our Constitutional Budget Reserve fund, and significantly reduce the funding in the Earnings Reserve account, which will be needed in order to maintain a sustainable payment to support state services. Significant reduction of the Earnings Reserve would threaten the very existence of the Permanent Fund Dividend program and possibly impact the size of the fund itself. We are left with difficult choices, and those choices need to be made this year to avoid significant negative effects on our economy.
Governor Walker introduced his FY2018 Proposed Budget on December 15, 2016, and provided a series of presentations (available online here), which outline his proposal and provide further detail. For a short recap, see the Budget Overview. Basically, the proposal includes restructuring of the Permanent Fund earnings allowing for the use of excess earnings to provide funding support for state government. The plan requires establishing new sources of revenue, which are not defined in his plan with the exception of a motor, marine, and aviation fuel gas tax increase anticipated to generate $40 million. The plan also proposes additional cuts to state spending (see a summary of the highlights here). Overall, I will be looking for a sustainable and comprehensive plan to be laid out on the table. At a minimum, we need to address the biggest pieces which are restructuring of the Permanent Fund Earnings Reserve to provide for a sustainable transfer to state General Funds, capping the Permanent Fund Dividend, and establishing a fair statewide income tax that will allow us to capture revenue from out-of-state workers who are taking money earned in Alaska to their home states. We have also talked about looking at the oil tax structure, and there may be some changes there.
The Juneau Opioid Workgroup has put together a quick (5 minute!) survey, linked here. The Workgroup is trying to access a broad cross-section of community members in order to get an accurate picture of opioid use and perception in Juneau. Thanks for taking a moment to provide your feedback and help them out.
Shape Lemon Creek’s Future! You are invited to join MRV Architects and CBJ staff on Saturday, February 4th from 9am to 12pm at Dzantik’i Heeni Middle School (in the Commons) to help shape the future recreational needs of the Lemon Creek area. How do you use Lemon Creek? What would you like to see in Lemon Creek…active uses such as ball fields and playgrounds, or passive uses such as trails and picnic areas…or a mix of both? The public design workshop is open to everyone—children too! We hope to see you there. Click here for more information on the Lemon Creek Area Plan.
As always, please feel free to contact my office with questions or concerns.