Dear Friends and Neighbors,

Last weekend, I attended the “Alaska’s Fiscal and Economic Future” forum about Alaska’s fiscal challenges and different options for moving forward with a long-term fiscal plan for Alaska. As public officials consider a long-term fiscal plan for Alaska, it is important to hear from diverse groups of Alaskans and consider all of our options. In the midst of back to school activities and winding down summer activities, I hope everyone is enjoying the wonderful fall weather!

Alaska Common Ground Fiscal Forum

The “Alaska’s Fiscal and Economic Future” forum was hosted by Alaska Common Ground, a group dedicated “To cultivate Alaska’s common ground for ‘government of the people, by the people, for the people’ by engaging diverse citizens in active pursuit of informed mutual understanding and agreement on vital issues of public concern.” The goal of the forum was to help engage Alaskans in the statewide conversation about Alaska’s fiscal and economic challenges.
The forum aimed to explore:

• Impacts of fiscal options: expected effects of fiscal options, including the use of savings or new revenues as well as their short and long-term effects on the economy.
• Fiscal packages: Combinations of fiscal options that could balance state spending and revenues over time and their combined impacts on the economy, industries, and individuals.
• Implementation strategies: How and when the different fiscal options could be implemented, and the institutional and political challenges in doing so.
• Advance citizen involvement in the conversation about Alaska’s fiscal and economic future.

The forum explored four fiscal options to balance the state’s budget. One fiscal option included budget cuts to megaprojects, eliminating oil tax credits, introducing an income tax, seasonal sales tax, severance taxes on minerals and coal, and raising impose taxes on alcohol, sugar and sugar drinks, motor fuel, tobacco, marijuana, and prescription drug advertising. This option also included dividing unorganized boroughs into boroughs and introducing a property tax. Lastly, this option drew Permanent Fund earnings as necessary up to 50% after inflation proofing and fixing the PFD at $1,650 with cost-of living adjustments.

This graph reflects budget scenario one, which includes new revenues and using the earnings from the Permanent Fund and fixing the PFD at $1,650.

The second fiscal option proposed ways to invest in Alaskans like increasing funding for education, including early learning, and increasing funding for health/wellness over the next two years. This option also called for new revenues such as increased taxes for resource development, PERS/TRS net arbitrage bonds, and a sales tax. This option also drew from the Permanent Fund earnings.

The third fiscal option set a goal of reducing the state’s general fund spending by 2 ¾% each year starting in FY 17. The results in maintaining basic services while reducing general fund spending to $4.5 billion by FY 21. This plan also uses on the Constitutional Budget Reserve Fund and the Permanent Fund earnings reserve to fund budget deficits.

The final fiscal option is based on Scott Goldsmith’s (formerly with the Institute of Social and Economic Research) sustainable budget model. The model reduces general fund spending to $4.5 billion by FY 18, a majority of reductions come from the elimination of oil tax credits. The proposal pays for current spending by combining oil revenues with Permanent Fund earnings and draws from the Constitutional Budget Reserve Fund.

This graph reflects the final budget scenario, which relies heavily on savings from the Constitutional Budget Reserve and Permanent Fund earnings.

The Fiscal and Economic Future forum helped continue the discussion on a long-term fiscal plan for Alaska. It was educational and demonstrated that there is no single way to get to a sustainable budget. The presenters showed that a solution will be detailed and complex. As Alaskans, we must work together to eliminate our budget deficit and protect our investments.

Permanent Fund Dividend

This week, the Governor announced that each Alaskan will receive $2,072 for their annual PFD. Without adjusting for inflation, this dividend is the largest PFD the State has ever distributed. In making his announcement, the Governor noted the need for a long-term fiscal plan:

“It is time to have an open and honest conversation about our finances, and how resources like the Permanent Fund can be used as an asset. The vision of the Permanent Fund was to turn a nonrenewable resource into a renewable one, and it is our job to determine how to best use and protect that gift for the benefit of all Alaskans.”

Shania Sommer, a seventh-grader from Palmer Junior Middle School, announced the exact amount of the check. You can watch a video of the announcement and the Governor’s speech, here.

I appreciate the Governor’s thoughtful comments and I am looking forward to his leadership on this important part of a long-term fiscal plan.

Community Events and Opportunities

The West High Art Project First Friday Art Walk is October 2nd from 5-10pm at the Hotel Captain Cook.

Pyrah’s Pioneer Farm in Palmer is hosting a Fall Harvest Festival this Saturday, September 26th, from 12:00-7:00 pm. Learn more by clicking, here!

As always, please let us know if you have suggestions or concerns.

Sincerely,

    Rep. Matt Claman

    P.S. follow me on Facebook and Twitter

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