Base Alaska’s fiscal plan on 4 principles

In this first week of the fourth special legislative session of 2017, the main topic of conversation and news coverage has been reform of SB 91, the crime bill. Adjustments to this bill are necessary and welcome, but let's not forget the other piece to the special session puzzle — revenue.

Revenue is a critical part of a comprehensive fiscal plan, and lack of revenue has a direct causal relationship to our inability to prosecute crimes; our understaffing of police, troopers and village safety officers; and underfunding of addiction treatment programs.

We have four key principles we hope will guide the Legislature's actions. These principles are: 1) protect the long-term viability of the Permanent Fund; 2) ensure a continued, meaningful dividend for Alaskans; 3) choose a fair, appropriate broad-based tax; and 4) protect Alaskans' fair share of our oil and gas resources. Together, these principles are a framework for a sustainable Alaska. They'll balance our budget, ensuring our grandchildren will have a state of opportunities and a quality of life that keeps and attracts the best and brightest.

We must address our revenue gap with a comprehensive fiscal plan. In the last five years, we've cut over $3.5 billion from the operating budget. In most agencies, cuts have gone as deep as they can go. Earlier this year, the attorney general testified that because of significant staffing cuts, the Department of Law couldn't prosecute approximately 7,000 misdemeanor cases between 2013 and 2016. As many of our friends and neighbors can confirm, people calling to report car break-ins, petty theft, purse-snatching, etc., have learned that law enforcement lacks the resources to be fully responsive. We've eliminated hundreds of positions in right-sizing government and ended cash subsidies for the oil industry, but we can't cut our way out of our revenue deficit.

[Could Alaska lawmakers approve a tax in the special session? Some think so]

We've finally reached a baseline budget that economists tell us is "right-sized." However, state income is so low, the Office of Management and Budget predicts a looming deficit of at least $2.5 billion. While we'll never stop looking for more efficient ways for government to work, the tree has already been pruned, and more deep cuts will have increasingly serious consequences.

This spring, the House bipartisan majority passed a fiscal plan with support from the governor and our caucus. While Senate Republicans blocked it, we believe it established a framework that can help us move forward in this coming special session:

Permanent Fund

The Permanent Fund is essential to Alaska's future. Today, the fund's principal is about $50 billion, which cannot be touched without a vote of the people. Its earnings last year beat the markets, and the fund generated billions in revenue to fund dividends. In the future, it will probably also be a source of general government revenue. Some dream of a $100 billion fund whose earnings could pay all our bills. One action in the special session must ensure the long-term viability of the fund. We must not put this valuable, renewable resource at risk.

Permanent Fund dividend

Former Gov. Jay Hammond called the dividend every Alaskan's connection to a vested interest in the Permanent Fund itself. If Alaskans become disconnected, we risk losing sight of the long-term purpose and value of the fund in protecting our future. The dividend also boosts our private sector economy. Without that economic punch every year we all suffer, with job losses in private-sector businesses and tens of thousands of Alaskans sinking into poverty.

Broad-based taxes

Whatever we adopt must be fair and equitable. It must not come down hardest on the poorest and least-advantaged Alaskans. It must include the more than one-fifth of our workforce living out of state while benefiting from Alaska's public services and facilities.

An income or head tax based on a progressive scale — where the higher your income, the greater proportion of your tax burden — is the fairest and best approach. A sales tax is the least fair approach, and cities across the state (most of whom bit the bullet years ago and adopted their own sales tax) oppose it. Economists tell us it's the most harmful to the private sector, outside of more draconian budget cuts. We believe the House and Senate can find a fair approach to a broad-based income tax and we're also sure nobody will love it. But, without a broad-based tax, we threaten the viability of the Permanent Fund and thus Alaska's sustainable future.

Oil and gas taxes

Historically, Alaska received roughly 27 percent of the value of our oil and gas. Changes to the law reduced that to a mere 8 percent. The oil industry has made hundreds of billions of dollars in Alaska. Our state provides it a safe, secure environment to work., and we've supported the industry for decades with favorable tax policy and shared investments. The industry, in turn, employs Alaskans, invests in our communities and develops our resources. For years that balance was harmonious, and now we must restore the balance. Even a modest increase in oil and gas taxes could lead to a much smaller broad-based tax and lower draws from the earnings of the Permanent Fund. We must return to an equal partnership with the oil and gas industry — one that ensures Alaskans get a fair value for our non-renewable resources.

We hope taken together, these four principles will guide the outcomes of the coming special session. They're the mileposts to a viable future in which we are all partners in prosperity. We are confident Alaskans are willing to share in the sacrifice now, so we can create opportunities for tomorrow. All of Alaska is counting on us.

Sen. Berta Gardner, D-Anchorage, has served in Legislature since 2005. Sen. Tom Begich, D-Anchorage, was elected to the Senate in 2016.

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