Senate Says Fiscal Plan Works with No New Taxes Required
May 01, 2017
A sharp collapse in oil prices drove the state to deficits over the last five years. Despite significant cuts to the state budget, a $2.5 billion deficit is anticipated this year. Reserves are quickly running out, driving the need for a responsible solution.
The Alaska Senate Majority has proposed $185 million this year in budget reductions, a spending limit to keep future growth in check, and use of Permanent Fund earnings to help pay for government and a dividend. The remaining gap would be filled with responsible draws from the Constitutional Budget Reserve (CBR), which modeling shows can support the state’s reduced budget through the anticipated revenue shortfalls. The CBR is used, but not depleted, maintaining a healthy balance.
“The Senate has presented a plan to resolve our $2.5 billion deficit on a glide path that is safest for our economy and our state in this recession,” said Sen. Anna MacKinnon (R-Eagle River) co-chair of the Senate Finance Committee.
Legislative Finance Director David Teal was unequivocal that the cornerstone of any fiscal solution must involve use of Permanent Fund earnings to help pay for government, which is part of the Senate Majority’s solution. Without a plan, the Constitutional Budget Reserve (CBR) would be gone in Fiscal Year 2019, and the Permanent Fund earnings and dividends would quickly follow suit.
“[Friday’s] meeting using the administration’s numbers and conservative assumptions proved that the Senate fiscal plan is a complete plan,” said Sen. Peter Micciche (R-Soldotna). “We do not support an income tax because we do not need an income tax to pay Alaska’s bills. Hitting Alaskan families and seniors with new taxes would give the state more money than it actually needs to operate, overcapitalizing this government and encouraging spending we have worked so hard to reduce since 2013. We demand efficiency in our government, instead of feeding an insatiable appetite to spend more money at will. It would be short-sighted and irresponsible to initiate an income tax at this time as we work to get our economy out of a recession.”
The backbone of the Senate Majority’s solution is a spending limit that excludes capital budgets, dividends and debt obligations.
“If revenue increases someday – and I hope it does – there will be pressure to spend more,” said Sen. Natasha von Imhof (R-Anchorage). “It will take disciple and resolve by future legislators not to do that, and a spending cap will keep a level of discipline in place.”
Editing by Mary Kauffman, SitNews
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