by Senators Johnny Ellis, Kim Elton, Bettye Davis,
Hollis French, Gretchen Guess, Lyman Hoffman,
Georgianna Lincoln, Donny Olson
May 07, 2004
Democrats recognize that balancing Alaska's budget may involve some use of Permanent Fund earnings. That is why we have not taken that option off the table. However, it is the Democratic position that Permanent Fund earnings should not be the only source of funds to balance our state budget.
Democrats believe that if Governor Murkowski and Republican legislators are allowed to go through with their Permanent Fund only approach, using the earnings will soon become a habit. In future years, Republicans will turn ever more quickly to the Permanent Fund to balance the budget until your dividends are a memory. With the dividends gone, and individual Alaskans no longer having ownership of the fund, how long can the fund itself survive? The Governor has hitched his desire to spend Permanent Fund earnings for government to the Percent of Market Value (POMV) proposal for managing the fund, but he has refused to support a guarantee that dividends will not diminish because of legislators who could cut future PFD's with a simple majority vote.
Governor Murkowski's POMV proposal would not mean more money for education. Governor Murkowski simply wants to replace state general funds with Permanent Fund dollars. His budget flat funds education and does not provide the additional resources our schools sorely need. Teachers have suggested using Permanent Fund payouts for education only on the condition that the money be matched dollar for dollar with other state funds, but Republican senators have turned down that idea. Senate Democrats are strongly committed to repairing the damage to our schools inflicted by years of ill-considered budget cuts, new laws and inflation. We believe the teachers' proposal has merit and should be part of the budget balancing discussion.
A Comprehensive Approach
Rather than simply raid the Permanent Fund, Democrats believe that the legislature should instead develop a comprehensive plan that includes several new revenue sources. Diversifying our revenues avoids overburdening any one source and best assures a dependable, stable income stream. For example, we have suggested revamping oil taxes, especially the Economic Limit Factor (ELF) that results in an undeserved tax break on productive, highly profitable fields.
Once we've built a solid foundation of other revenues, then we can consider using some Permanent Fund earnings. When we do, we should protect the dividend in the Constitution. The amount dedicated should ensure that dividends do not pay less over time than the current, time-tested management method would be expected to yield.
Democrats believe that a balanced approach such as we've suggested would pass not only in the House and Senate, but would also find acceptance with voters. Without a balanced plan, with a plan that only targets the Permanent Fund and does not protect the dividend, we believe Alaskans will turn down POMV if it gets to the November ballot.
Senate Republicans have rejected the Democratic approach. Indeed, they have flatly ruled out any consideration this year of amending the ELF or constitutionally protecting the dividend. We will keep working on the problem and making suggestions for a compromise this session.
Virtually everyone agrees that Alaska must do something to balance its books, and that time is running out. Our children deserve a first rate education. Our businesses deserve a stable fiscal climate that encourages investment. All Alaskans deserve safe communities and a healthy environment. Democrats believe that by considering all our options and leaving nothing off the table, we can build a consensus among Alaskans for a stable and prosperous future.
The Alaska Senate Democratic Caucus:
and do not necessarily reflect the opinions of Sitnews.