Alaska fiscal forum focuses on working together

Thursday, March 24, 2016

Robin Wood

- A majority of participants at a Fairbanks economic forum addressing Alaska’s multi-billion dollar budget deficit seem to support both raising revenue through taxes and using part of the Alaska Permanent Fund to pay for state services, potentially putting them at odds with the Alaska Legislature.

Hundreds of residents attended the Rasmuson Foundation’s Plan4Alaska town hall meeting on state finances at the Carlson Center on Wednesday. Before any discussion about problems and solutions, attendees took cellphone polls on the state’s fiscal challenges. About 90 percent of participants said budget shortfalls should be addressed by both cuts and new revenues, about 70 percent supported an income tax on people who earn more than $100,000, and almost 100 percent supported smaller dividends from the Alaska Permanent Fund.

The audience wasn’t as decisive when specific cuts were mentioned. About 40 percent supported a broad cut of 10 percent to Alaska’s budget, while 50 percent didn’t.

After the meeting, Rasmuson Foundation President and CEO Diane Kaplan said the Fairbanks crowd seemed business-oriented and “very concerned about creating an unfavorable (business) atmosphere, rather than cuts or revenue.”

An engaged audience asked questions and shared perspectives with a diverse panel. The panel consisted of Larry Persily, Jim Dodson, Aaron Schutt and Matt Buxton. Persily is an oil and gas special assistant to Kenai Peninsula Borough Mayor Mike Navarre; Dodson is president and CEO of Fairbanks Economic Development Corp.; Schutt is president and CEO of Doyon, Limited; and Buxton is the Daily News-Miner’s state government reporter. KUAC news reporter Dan Bross moderated the forum, which was sponsored by the Daily News-Miner. Panelists consistently talked about the need to diversify Alaska’s economy, create and invest revenue without hindering businesses and work together on all available options.

Few specifics were addressed in terms of possible cuts, but Kaplan pointed out that only two departments receive state funding in excess of $1 billion — the Department of Health Social Services and the Department of Education and Early Development. Dodson gave a blunt assessment of Alaska’s economy, saying money is taken out of the North Slope’s ground in the form of oil, sent to Juneau and thendistributed to Alaskans “in some convoluted way.” “We’re not building infrastructure to create new economy, we’re not creating jobs and economic opportunity from all the resources we have in the state, we’re simply consuming our oil dollars.”

Figures from the University of Alaska Anchorage’s Institute of Social and Economic Research were provided in a pamphlet at Wednesday’s meeting and gave a breakdown of recent spending. From 2006 to 2013, during times of high oil prices, Alaska’s general fund more than doubled — from slightly more than $3 billion in 2006 to almost $8 billion in 2013. Spending on capital projects — items such as roads and buildings — contributed significantly to the budget increases. But capital spending has been cut dramatically since 2013, unlike oil and tax credits and agency operations, which also grew by about $1 billion each in the last decade.

Schutt addressed the delicate balance between tax credits aimed at increasing production and funding state operations, saying Doyon has been a beneficiary of a “generous state program” facilitating the corporation’s exploration for gas near Nenana but saying “everything needs to be on the table.”

“As a state we’ve got to continue a level of activity. Oil production comes from investments made many years in advance of the production. ... When we’re successful, we’ll be the ones paying the bills,” Schutt said of Doyon.

Persily addressed Alaska’s previously abolished income tax, calling the 14.5 percent tax in 1979 “a very heavy income tax” that would raise more than $1 billion per year if implemented today.

An air of uncertainty arose when discussion about the Legislature’s handling of the current fiscal crisis began. Of the Legislature, Buxton said they’re “not really working together, at least not right now.” Kaplan referenced a disconnect between Gov. Bill Walker’s fiscal plan and the Legislature, saying a big problem is too many separate bills to increase taxes. “You’ve got one bill to increase the mining taxes, one bill to increase alcohol taxes, one bill to increase tobacco taxes. ... No industry wants to be singled out and have their industry taxed and then everybody else not taxed,” she said. Kaplan believes the Senate is starting to move toward some sort of fiscal package but said she’s less hopeful about the House, where she said leaders have less ability to get minority members aboard.

How best to engage lawmakers seemed one of the audience’s biggest concerns. After the meeting, Juliet Shepherd, a project manager for Fairbanks Economic Development Corp., said her concerns were “validated there may not necessarily be an effective way to reach legislators.” “It really is about Alaskans stepping into the driver’s seat and taking the wheel,” Shepherd said, adding, “This isn’t business as usual.”

Plan4Alaska is a $2 million educational campaign funded by the Rasmuson Foundation. Similar town hall meetings are planned in Palmer at 5:30 p.m. today and in Kenai at 11:30 p.m. Friday.

The Rasmuson Foundation does not advocate for any specific legislation but does advocate for an approach using all available methods — cuts, taxes and the Alaska Permanent Fund.

Contact staff writer Robin Wood at 459-7510. Follow him on Twitter: @FDNMcity.