Dunleavy proposes constitutional changes amid budget debate
Gov. Mike Dunleavy on Wednesday proposed constitutional changes that would limit legislative authority and give voters a say on taxes and any changes to the Permanent Fund dividend.
One of the proposed amendments is aimed at ensuring the PFD is not changed without a vote of the people.
Another seeks to set what Dunleavy called a "spending and savings rule," replacing an existing spending limit that critics say is too lax and targeting leftover revenue to the permanent fund and a reserve account.
The third constitutional change would let voters decide whether to approve any new or higher state taxes passed by lawmakers. If, on the other hand, voters by initiative pass a new or higher tax, legislators would be asked for their approval.
Dunleavy, a Republican, said his proposals, if approved, would help create a durable fiscal plan. "This is going to right the ship," he told reporters. "It's not going to be easy but I think intuitively we all know it needs to be done. We need to fix this now."
Dunleavy's administration projects a $1.6 billion deficit for the coming fiscal year, and lawmakers are bracing for major cuts in the budget expected to be released by mid-February.
Dunleavy said the relationship between legislators and voters should be tight. He said his proposals "certainly hem us in" but would be good for the state in the long run.
He said the state has a referendum process where, if a tax is imposed, the people could repeal it. "That's problematic if you want stability and durability," he said, adding that his proposals aim to get agreement on such issues on the front end.
According to the Division of Elections, four referenda have successfully been proposed and appeared on the ballot, the most recent in 2014, when voters upheld an oil tax overhaul.
Alaska has no state sales or personal income tax — ideas that have been batted around in recent years amid the fiscal debate. But the state has an array of other taxes addressing such things as corporate income, oil and gas production, motor fuels and marijuana.
Each of the proposed constitutional changes would need two-thirds support of both the House and Senate to qualify for the ballot, which Senate Rules Chair John Coghill said could be difficult to reach this session.
The North Pole Republican said he thought there was generally good support for the ideas.
"Now, whether those ideas belong in the Constitution, I think, is a proper debate," Coghill said. "It will be interesting to see how the governor defends them."
Anchorage Democratic Rep. Matt Claman said the state has a strong governor form of government and is hesitant to support anything that further limits the Legislature's power to act as a check and balance.
Dunleavy's proposal dealing with spending and savings would replace what is now known as the Constitutional Budget Reserve fund with a savings reserve fund.
Attorney General Kevin Clarkson said the fund would be easier to access than the CBR — requiring a simple majority rather than a three-quarter vote of both the House and Senate — but its use would be limited.
Claman expressed concern with the potential shift and said a three-quarter vote requirement gave power to legislators in the minority, which he said is important for them to have some influence.