Representative Geran Tarr

FEBRUARY 20, 2017

8 Budget Meetings, 1 Budget Survey, and
Working Towards a Fiscal Plan

Dear Friends and Neighbors,

I just want to take a moment to review where we’ve been and where we are now regarding the budget and a fiscal plan.  The conversation about the budget and how to get our fiscal house in order is not new.  I held my first community meeting in the Fall of 2015 because I knew then we needed to take action.  I was pleased with the large crowd in attendance because that told me you all cared and knew we had to take action too.  We had Bob Loeffler of ISER bring the Budget Balancing Game and we spent time trying to figure out how to balance the budget ourselves.  Options ranged from just using the Permanent Fund to statewide taxes like sales and income taxes or more cuts.  The game demonstrated the challenge of finding the right solution. 

Following the budget meeting, I held two follow up breakfast meetings prior to heading off to the 2016 session.  There we brainstormed more questions about the budget and the different options.  My office researched the questions and shared the responses in an e-news that can be read here:  http://akhouse.org/tarr/010616_newsletter.htm

Once we came to session, then Senator Ellis and I sent out a budget survey.  We were pleased that we received hundreds of responses.   You can read the results of the survey here:  http://akhouse.org/tarr/042916_newsletter.htm

Meeting number four was our mid-session constituent meeting March 12th to hear more from neighbors about thoughts on our budget and important priorities.  Because of technical issues that prevented me from participating in person, I held another meeting, meeting number five, on March 15th. 

As session continued, I hosted three additional telephonic meetings so folks could call in and ask questions or get up to date information on the status of budget negotiations and the pieces of a fiscal plan.  I’m planning to start sending status updates on the budget and fiscal plan again starting next week and will use the same format to update you on the status of budget and fiscal plan related  bills.  You can read more about these here:  http://akhouse.org/tarr/032516_newsletter.htm

Last summer Special Sessions drug on, but there was an unwillingness to act on the part of the former House Majority.  That brings us to where we are today.   Today, we have a new House Majority Coalition that came together specifically to address our fiscal challenges.  For the first time since I’ve been in the House, the House has offered a Fiscal Plan.  The House Majority Coalition that I am a part of has offered a fiscal plan, with four parts to achieve savings and revenue. 

We have Anchorage Caucus coming up this Saturday at the Anchorage LIO from 10 am – 12 pm so I hope you’ll attend and share your thoughts.  Then, coming up after is our annual constituent meeting on March 25th (please note the new date!) so we can get more feedback from you.  Of course, my door is always open and I want to hear from you. 

WORKING ON THE BUDGET

I’ve been working to do the things you said in the survey.  93% said reduce oil tax credits.  As the House Resources Co-Chair I am working very hard to reform our broken oil and gas tax system.  I hope you’ll follow our work on House Bill 111, with hearings all this week and likely next week too. You can watch the hearings here or follow the bill online here

71% said efficiency cuts with new revenues.  That’s why I’m supporting the strategic cuts offered in Governor Walker’s budget and House Bill 115, that will protect the dividend and institute a small income tax, 15% of your federal tax.  Because the federal income tax is progressive, this model protects lower income Alaskans.  Our area is a moderate to low income area so having a plan that doesn’t place the biggest burden on the lowest income Alaskans is very important to me. 

Let me be clear.  If there is not an income tax then the alternative option is what the Senate Republican Majority passed last year, which is a PFD only plan.  A PFD only plan would hit moderate to low income families the hardest and in the end they would end up paying a much higher percentage of their income to support state government while the wealthiest Alaskans pay very little.   A report commissioned by Rasmuson Foundation details this disparity.  Page 8 discusses how the PFD only plan amounts to a 10% income reduction on the lowest income Alaskans while only amounting to a 1.3% reduction to the top 20% of wage earners.  Read the entire report here:
http://www.rasmuson.org/wp-content/uploads/2016/04/AKrevenueoptions0416.pdf

4 pillars of fiscal plan
WORKING ON THE FISCAL PLAN

Alaska has to have a diversified economy if we are to remain standing through these turbulent times. A one-industry approach is no longer strong enough. Alaska needs a retrofit. Diversifying the ways we address our budget deficit means we strengthen our ability to carry Alaska north to the future.

These are the four pillars for our fiscal plan:

  • Strategic Cuts. Smart, balanced budget cuts and efficiencies.
    I am working closely with the Governor’s office to make sure one Department will not be hit harder than the rest.
     
  • Oil/Gas Reform. Hardening of the tax floor, a 5% minimum tax rate, and a re-examination of Alaska’s oil credit system.
    See last week’s Tarr’s Times for more information.
     
  • Income Tax. New revenue in the form of a broad based tax.
    Say an Alaskan earns $50,000 annually. The federal tax on this annual salary would be about $6,000. Alaska’s income tax would be 15% of that $6,000 dollar amount (around $900). Not only would this Alaskan’s income tax be a deductible on their federal tax, they could also pay off their income tax with the PFD. The bill keeps the PFD at about $1100 so this person would receive a $200 check from the state.  Based on 2015 estimates, an income tax would generate approximately $655 million once fully implemented and include non-resident workers and corporations that currently avoid Alaska’s corporate tax.  Non-resident workers would contribute about $70 million of the $655 million total, a number that highlights how many high paying jobs in Alaska are being held by out of state workers.
     
  • Protecting the Dividend. A dividend of at least $1100, allowing a structural change to allow a small portion to be used to fund state government.
    A structured draw from the Earning Reserve would be based on 4.75% of the market value of the full  fund value. This draw would be split, with two-thirds going to the general fund and one-third going to the dividend. Alaskans would receive a dividend of at least $1100. For FY18, a 4.75% draw would equal about $2.285 billion with $762 million going into the dividend and $1.523 billion going to the general fund.

“The Alaska Budget Game” (photo credit: Philip Hall / University of Alaska Anchorage)
“The Alaska Budget Game” (photo credit: Philip Hall / University of Alaska Anchorage)
In Fall 2015, ISER Staff Bob Loeffler brought the Alaska Budget Game to our constituent meeting.   

Alaska is a young state with tremendous potential, and we are working hard to make sure the blueprint for Alaska provides us with a sustainable future.

Sincerely,

signed: Geran Tarr
Representative Geran Tarr

PS. Two more things:

1.       DATE CHANGE!  The constituent meeting is now March 25th, from 2-4 pm at Clark Middle School. 

2.       This is one of many events discussing our budget and economic outlook.  Hope you can attend!



MY OFFICE

SESSION
State Capitol Bldg. Room 126
Juneau, AK 99801
P (907) 465-3424 F (907) 465-3793

INTERIM
1500 W Benson Blvd, Rm 229
Anchorage, AK 99503
P (907) 269-0144 F (907) 269-0148

Rep.Geran.Tarr@akleg.gov
http://www.repgerantarr.com/
http://www.facebook.com/geran.tarr

Celeste Novak, Legislative Aide
+1 (907) 465-3424
Celeste.Novak@akleg.gov

Thatcher Brouwer, Legislative Aide
+1 (907) 465-3424
Thatcher.Brouwer@akleg.gov

  MY DISTRICT

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Congressman Don Young
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EMAIL: Rep. Don Young