Senate Affirms Fiscal Solution Friday
April 27, 2017
If Alaska's lawmakers can't figure out how to agree on the budget, the state government would shut down on July 1, 2017.
Despite significant budget reductions over the last four years, the state faces a $2.8 billion deficit this fiscal year. While the House, governor, and Senate agree the solution must include responsible use of Permanent Fund earnings to help pay for government and dividends, there is a difference in how to fill the remainder of the gap.
The Alaska Senate proposes capping government spending at today’s levels, and drawing from the Constitutional Budget Reserve to cover the deficit – without depleting those reserves. The Alaska House and governor do not support a spending limit to prevent government from growing, and want to implement a substantial new income tax on Alaska’s wage earners, businesses and retirees to supply government with more money.
“We want Alaskans to understand why the Senate supports a no-new-taxes solution to our fiscal problems,” said Sen. Anna MacKinnon (R-Eagle River) co-chair of the Senate Finance Committee. “We’ll vet our solution against a variety of assumptions, stress-testing it for the future and also for how well it protects our Permanent Fund.”
However the Alaska House Majority Coalition says that of the over 100 Alaskans who provided public testimony Tuesday night to the Senate Labor and Commerce Committee on the proposed Education Funding Act, a significant majority of those who testified spoke in favor of House Bill 115 and maintaining Alaska’s commitment to public education and the University of Alaska. HB 115 passed the Alaska House of Representatives earlier this month and is under consideration in the Alaska State Senate.
One of the four pillars of the comprehensive fiscal plan put forward by the Alaska House Majority Coalition is the Education Funding Act. The House Majority Coalition does not call this an income tax although it is a tax on income.
“I was heartened to see so many Alaskans willing to wait hours on the phone or in person to voice their support for this key pillar of our comprehensive fiscal plan,” said Speaker of the House Rep. Bryce Edgmon (D-Dillingham). “This is further proof that Alaskans want a full fiscal solution this year to stabilize the economy and end the ongoing recession.”
According to the Alaska House Majority Coalition, House Bill 115 features a modest, progressive income tax anticipated to generate $687 million a year once fully implemented in 2019. $80 million would come from non-residents, who would be taxed on income earned in Alaska. When combined with the House version of the Permanent Fund restructure, these two mechanisms ask Alaskans to contribute less than 3 percent of their total annual income, whether they are in the bottom 10 percent of earners or the top 1 percent.
“What we witnessed [Tuesday] night was further proof that Alaskans are willing to undertake some personal sacrifices to provide for education and fiscal stability in the state of Alaska. The burgeoning support for the Education Funding Act is further evidence that our Coalition is on the right course in proposing a plan that fully balances the budget and spreads the burden fairly across the entire economy rather than targeting just one industry or segment of the population,” said House Finance Committee Co-chair Rep. Paul Seaton (R-Homer).
“Votes on taxes are hard and politically charged, but it’s become abundantly clear that the people of Alaska want us to make the hard choices, ignore the political risks, and plan for the kind of Alaska we want to live in,” said Seaton.
The money collected from the Education Funding Act would be used to fund K-12 education in Alaska, which the Alaska State Senate has targeted for a $69 million reduction. The House version of the FY 2018 operating budget protects the current level of K-12 and University of Alaska funding in the FY 2017 budget.
“Without new revenue, Alaska will lose many of the essential services that previously were funded by oil. I am not willing to sacrifice the education of my children, or any child, just because the price of oil dropped. If education goes south, people will go south,” said Rep. Adam Wool (D-Fairbanks).
Wool said, “I understand that taxes can be a dangerous issue for many politicians, but our Coalition was formed to make the hard decisions and take the tough votes. That’s what we did by passing House Bill 115 in the House and that’s what the people want. With the support of the people we can convince the Senate to do the same.”
Quoting a news release from the Alaska House Majority Coalition, their comprehensive fiscal plan is made up of the House version of HB 111 to reform Alaska’s unsustainable oil tax and credit system, the responsible budget cuts included in HB 57, the appropriate use of some of the earnings from the Alaska Permanent Fund Earnings Reserve in SB 26, and the Education Funding Act. All of those pieces of legislation have passed the Alaska House of Representatives, setting up negotiations between House and Senate leaders over competing visions for Alaska’s future.
House Bill 115 is currently under consideration by the Senate Labor and Commerce Committee, which held the public testimony on the bill Tuesday night.
Alaskans concerned about the state’s deep deficit and the prospect of a new income tax can join members of the Alaska Senate for a presentation of the Senate Majority’s fiscal solution at 9 am tomorrow, April 28, in Juneau. The public is welcome to attend in Juneau, and can watch live online at akl.tv.
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Reporting & Editing by Mary Kauffman, SitNews
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