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Community Perspective

The missing pieces of Alaska's fiscal puzzle

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Assembling a long-term fiscal plan for Alaska has been like putting together a jigsaw puzzle with key pieces missing from the box.

It’s frustrating and you can’t win, no matter how much you try pounding the pieces to fit together.

In this case, the puzzle would go together better with a governor who doesn’t stretch the numbers to suit his arguments, and who thinks more about public services that can build the state’s future and less about dividends that can build his reelection campaign.

The puzzle also is missing a few other pieces, particularly more legislators who understand that the Permanent Fund dividend should not take precedence over all else in the state budget, and that it’s not OK to treat the savings account as an ATM that can pop out extra cash to pay a supersize PFD.

That’s not to say all of the other pieces fit perfectly, or that all the other puzzle masters are acting in unison. But at least they see the same picture on the cover of the jigsaw box and are turning over all the pieces, which include a state income or sales tax, oil taxes, responsible spending, an affordable PFD, other taxes — and making Alaska an attractive place to live. There is more to quality of life than living tax free.

Gov. Mike Dunleavy has declared that an income tax is off-limits for any fiscal plan he could support. While he is not alone in that position — many legislators and maybe a majority of Alaskans would agree — he is purposely vague on what revenue pieces we would support.

The best Dunleavy can manage on sticking out his reelection neck is for his second-in-command at the revenue department to tell legislators last week that the governor “likely” would accept a sales tax, so long as it comes with big dividends in the constitution and a spending limit, also in the constitution.

The governor is making the work even harder by not submitting a single substantial revenue measure for legislative consideration, leaving it to lawmakers to guess at which pieces he would endorse. He sits back even as he acknowledges the state needs new revenues.

Worse yet, the effort is made more difficult for legislators and the public by some misleading math — sadly, one of Dunleavy’s frequent tactics.

In a presentation to a state House committee last week, promoting the governor’s plan to withdraw an additional $3 billion from the Permanent Fund to tide over the state until something else comes to the rescue, the Department of Revenue said the fund holds $18.6 billion in available earnings.

Not even close. Purposefully misleading to bolster the argument that the fund can afford a large PFD this fall and next and next.

As of the most recent financial statement, the Permanent Fund had a little more than half that amount uncommitted as of July 31. If you take the total value of the fund’s earnings reserve account and subtract what already is allocated for next year, you are left with $9.7 billion.

The governor wants to take one-third of that as a “bridge” to help cover bigger dividends. That leaves an awfully short bridge to cover a wide gap between spending and revenues in the years ahead.

Better to use all the puzzle pieces to build a more durable bridge.

Larry Persily is a longtime Alaska journalist, with breaks for federal, state and municipal service in oil and gas, taxes and fiscal policy work. He is currently owner and editor of the weekly Wrangell Sentinel newspaper.


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