The next legislative session: an opportunity

Four big issues face Alaskans in the legislative session ahead: how we expand our economy, how we define the dividend, how we control spending, and how we tax ourselves without turning away investment that creates jobs.

There’s an old saying that “the main thing is to keep the main thing the main thing.” In politics, distractions are aplenty. While the right to attempt a recall is enshrined in our constitution, the campaign to recall Gov. Mike Dunleavy is a distraction we don’t need. I expect Gov. Dunleavy to serve his full term and I want him to succeed — despite the fact we were, for a time in 2018, political rivals. As a former lieutenant governor who oversaw elections, I know elections matter. Likewise, I’ve worked with many of our legislators — on the campaign trail and in office — and I am prayerful they and the governor can better work together.

On the big tasks before us, here’s how I hope the year will play out.

First and foremost, we can most easily come together on economic development. Creating and maintaining high-paying jobs in the state — and responding to our opportunities — is something Alaskans need to discuss more. This could be the year we open the Arctic National Wildlife Refuge (ANWR) to oil and gas exploration. Federal decisions on timber availability in Tongass National Forest could, for the first time in decades, support a sustainable industry. Technology, tourism, fisheries and defense opportunities abound. Our long-term opportunities also deserve attention, such as an extension of the Alaska Railroad to Alberta and the Lower 48, the construction of new ports in the Arctic, pending new mines, and the export of liquefied natural gas from the North Slope. Whatever our differences on the budget, each of these things can add to Alaska’s economy and revenues. We should not miss our chance.

Second, on defining the Permanent Fund dividend, we must quit talking past each other. The “high” dividend approach the Governor has proposed echoes the late Governor Jay Hammond’s own motivation for creating the Permanent Fund and the dividend in the first place: not only to serve as a rainy day fund for government needs, but also to keep government from spending indiscriminately.

As it stands, two formulas to calculate the payout — the 1982 statutory dividend formula and 2018’s Senate Bill 26, which established a percent-of-market-valuation (POMV) draw from the Earnings Reserve Account — are difficult to reconcile. Let’s recognize we are all better off it the fund grows: If the market value of the $66 billion fund grew to $100 billion or more, a draw of 5% could pay for government services, avoid taxes and provide what the governor calls a “full” PFD.

We should pay our bills, and we should try to grow the dividend. Perhaps the solution is a new statutory formula that splits the POMV draw 75/25 (or some variation thereof) for state spending and dividends now at the fund’s present value, then 50/50 once the fund surpasses $100 billion. Like growing the economy, a bipartisan plan for growing the Permanent Fund could help us get over one of our biggest differences.

Third, as tough as it is, we need reach a consensus on spending. We have budget hawks who want to limit spending, and continuous wants and needs that would increase it. The governor has made clear that he is a budget hawk, but flexible on spending when it fits with a plan. Gov. Dunleavy’s December proposed budget is a good place to start. By keeping spending flat for fiscal 2021, the governor has given legislators an opportunity to debate what type of government works best for Alaskans. They should make the most of it.

Gov. Dunleavy put three constitutional amendments on the table last year to limit the growth of government spending and to solidify a dividend formula. The Legislature should consider them. Ultimately, of course, passage of a constitutional amendment is up to the people, and 2020 would be a fine year to see these proposals — with some modifications — on the ballot.

Fourth (and for some folks, first) is the issue of taxes. A pending oil tax initiative could be another unnecessary distraction. Raising taxes or eliminating net tax credits would roll back the reforms made to taxes two administrations ago, when I served alongside Gov. Sean Parnell. We have seen Gov. Parnell’s tax reform bring new investment to our state, so my vote is for stability. Similarly, while some in the Legislature might wish to impose personal income or statewide sales taxes, doing so would jeopardize the nascent recovery that Alaska’s economy has made since the end of 2018.

All told, I begin 2020 with hope. A long-term fiscal plan can advance the welfare of every Alaskan, pay a predictable dividend, and attract the investment needed to fuel economic growth. We are a small state with the capability – and, I hope, the will – to get there.

Mead Treadwell was lieutenant governor from 2010 to 2014.

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