GUEST COMMENTARY: It’s time to accept the governor’s compromise

  • Gov. Walker held a press conference June 6 to discuss the state budget and his compromise plan, which was rejected by the House on June 5. If a budget was not agreed upon, Walker warned of a possible government shutdown. Photo/Erin Granger/Juneau Empire

It’s time to accept the governor’s compromise.

We must end the standoff in Juneau because the option of doing nothing is devastating to Alaska, and delivers a crippling blow to our fragile economy. Another year of stalemate would deplete our reserves and would fail to reverse our slide into recession.

The Walker administration outlined the potential impacts of a shutdown of state government on Thursday, June 8. The specter they painted is grim: Closed commercial and sports fisheries, ferries parked, no driver’s licenses, death certificates or marriage licenses and the list goes on.

After calling the Legislature into special session, the governor proposed a compromise to break the legislative deadlock. The compromise is a masterful blend of all of the ideas and positions currently on the table from the governor, the Senate, and the House. It is less than perfect and has plenty to make everyone “equally unhappy.”

That said, it is a bold and significant step in creating a long-term sustainable budget that, while at a substantially reduced size, provides essential services, invests in education, and encourages business investments and jobs.

A complete plan would have included a budget that does not reduce any savings account. This compromise likely falls short of that by about $300 million but that is a far cry from the $3.5 billion dollar deficit a year ago. An 85 percent accomplishment of a historical change in our state financial framework is a victory in good governance and a legacy for future Alaskans.

The components of the compromise begin with a reduced budget. When the oil revenues tumbled in 2013 the budget was almost $8 billion. The new budget under this compromise would be close to $5.5 billion, almost a one-third reduction in state spending.

Second, using some of the earnings of the Permanent Fund and the Constitutional Budget Reserve would produce approximately $2 billion to reduce the deficit and still pay a $1,000 dividend to every Alaskan and inflation-proof the principle.

A fuel tax increase of 8 cents per gallon this year and then 8 cents the following year, making Alaska still one of the lowest fuel taxes in the nation, would produce $80 million per year new revenue intended for highway maintenance.

Next a broad based progressive education head tax on both residents and non-residents would produce approximately $100 million in new revenues, which would be intended in this and future years to be spent only on education.

The elimination of cashable oil tax credits reduces expenditures by another $1.2 billion over the next 10 years.

The net effect would reduce the fiscal year 2018 deficit from more than $2.5 billion to approximately $300 million. It would provide the continuation of vital public services. It would help maintain our bond rating, which is at serious risk.

And it would maintain the Constitutional Budget Reserve at a prudent level. In short, it would solve 85 percent of our budget crisis and set the stage for the next Legislature to fine tune our fiscal framework and produce a truly balanced budget.

In the spirited debate over the last two legislative sessions on the purposes of a fiscal plan there have been passionate advocates for many principles: ensuring that the sacrifices include all stakeholders from individual residents to oil companies, substantially reducing the level of state spending, establishing a fundamental fairness in who pays for additional revenues, in cutting the budget we do not put the burden on most vulnerable or on the educational investment in the next generations, and that we must protect our savings as they are the sources of a sustainable budget.

The governor has included all of these values in his compromise. The amount and the balance may fall short and not satisfy each advocacy. But please let their idea of perfection of our new fiscal reality be the continuing agenda for future legislative deliberations and actions. It must not be the basis for a continued gridlock, calling it quits, and falling off the fiscal cliff.

No other state in the nation has the opportunity to permanently fund almost 40 percent of its budget with earnings from its savings. By taking this giant step forward toward fiscal stability Alaska can turn the corner, attract investment, rebuild its economic foundation and pass on a legacy of opportunity and prosperity.

It’s time to complete the people’s business in Juneau, to be responsible and to put the long-term interest of Alaska first.

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Jim Jansen is Chairman of the Lynden Companies; Marc Langland is the retired Chairman and CEO of Northrim Bank; Tony Knowles is a former Governor of Alaska.

Updated: 
06/14/2017 - 1:03pm

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