Lawmakers are considering some of the most wide-ranging changes in the history of Alaska finances this year. That’s why the leaders of the House Finance Committee invited Governor Bill Walker and top state officials to talk about their budget plan – especially, the latest proposal to draw from Permanent Fund earnings.
Revenue Commissioner Randall Hoffbeck said with oil prices low for the foreseeable future, the only way to sustain the state budget is by drawing on the wealth state has built up in the Permanent Fund. While Walker’s budget plan includes new taxes and cuts to oil and gas tax credits, its centerpiece is the Permanent Fund plan.
“The other pieces of the plan will provide millions of dollars to the solution, but the Permanent Fund earnings can sustainably contribute of dollars to the solution,” said Hoffbeck. “And it is the only lever large enough that can get us to a sustainable solution. There’s no solution without using Permanent Fund earnings. And, while it’s hard to say, there’s no solution without adjusting the dividend calculation as well.”
It’s not clear if the presentation changed any minds. About half of the Legislature skipped it. And those who did attend repeated points they’ve made throughout the three-month session.
Walker said it’s important to have every element of his plan – including introducing a broad-based tax like an income tax.
Eagle River Republican Representative Dan Saddler asked Walker if he’d veto the Permanent Fund bill – based on spending a percent of the fund’s market value or POMV — if the Legislature doesn’t pass new taxes.
“If you were about to get this, but not the income tax, not the consumption taxes, not the resource taxes, not the tax credits, would you let this piece go by, or would you insist on having the whole thing and veto the POMV?” Saddler asked.
Walker suggested he’d sign it.
“I’ll let those certainly go through that come into play,” said Walker. “There’s no question about that. I’m not going to not let something go through that gets done. My goal is to make sure they go through. But I’m not going to stop something going through because not everything’s in line exactly.”
Even when state officials feel they’ve made the case for their plan, they find it’s difficult to win over Alaskans skeptical of a plan that would lead to cut a 50 percent cut in Permanent Fund dividends. Hoffbeck recalled his experience talking about an similar plan last year in Fairbanks.
“We thought we’d done pretty well on the weekend. We’d elevated the discussion. People started to talk about the issues,” Hoffbeck said. “They started to understand the problem. The next day, I get into a cab on my way out of town, and the cabbie, when I get in the cab, he’s got news talk radio playing. And on the radio. It’s me talking about taxes. This cabbie has no idea who I am. And he does one of these, he goes: ‘That guy’s an idiot.'”
Today is the 94th day of the legislative session. It’s not clear when or if the Legislature will vote on the Permanent Fund bill.
Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.
