The Key Point Is…

…The Key Point in Email Traffic

I try my best to keep up with the hundreds of emails I receive. Admittedly, it is getting more and more challenging, and there are not enough hours in the week – nights and weekends included – to respond to each. What I do see are recurring themes in the messages that arrive in my inbox.

I’m receiving a steady stream on both sides of the parental rights issue, on the need for a national convention of states to constitutionally push back from federal overreach and for a balanced budget, on protecting the electoral college, and to repeal ranked choice voting.

What I’m hearing about the most, however, relates to the budget and spending: opinions regarding a fiscal plan, taxes, the pfd, school funding, public employee retirement, and capital budget requests. Most tell me they support a full fiscal plan, they are leery of taxes, want the pfd settled, and want the operating budget reined in but a more substantial capital budget. Most public employees inform me they want a pension and increased school funding. Most private citizens tell me they don’t support either, with some adding the caveat that they could support snowplow drivers and teachers getting paid better.

As Alaskans write to express their perspectives on the budget and spending, they often ask my stance. I compiled some of my responses for you, so you’ll know too where I stand.

Budget: keep it lean without jeopardizing needed services. Please note that there are not the votes currently to trim the budget even where it might make sense. The Senate shifted significantly to the left as of the last election (one reason I support repealing Ranked Choice Voting) and supports growing the operating budget quite significantly. Those in the Senate Majority are supporting huge increases to K-12 schools to the tune of hundreds of millions of dollars but so far, without tying any funding increases to improving student learning outcomes (which makes no sense when our schools rank 49^th and 50^th in the nation depending on grade/subject). A majority of the Senate Majority members also support returning to a pension system which will also cost hundreds of millions over time despite the fact that we are still the worst state in the nation as far as our unfunded liability per capita for the old pension system we pulled back in 2006. They believe pensions are the panacea for recruitment and retention of public employees, while a study by Pew Charitable Trusts makes clear pensions not what young workers are seeking. Meanwhile, other states are moving away from expensive pension systems for the reason Alaska did, the risk and ballooning costs down the road. We need to be very judicious and make sure we don’t put our state and Alaskans in an untenable bind down the road. At the same time, we can consider increasing employee salaries and providing a larger employer contribution to the 401K retirement as a way to address the workforce recruitment/retention issue without creating a future risk that could spin out of control like happened in the early 2000’s. You can read more here. Whatever we do, we need an Alaska Sunset Commission to help ensure our operating budget is not bloated like my bill, SB 9 proposes (see #4 and here).

PFD: follow the law. Because the legislature has not had the votes to follow the law for 8 years and the courts have ruled that this is allowable, I believe the PFD should be settled in the constitution. It should not be debated each year and keep us from focusing on other important work. I would support changing the PFD formula in law to coincide with the 5% POMV draw limit in statute with 50% for the people’s PFD and 50% available for government spending (the same 50/50 arrangement that has been in law since the early 1980’s when the old draw calculation was set). This change in law should then be supported via a constitutional amendment so the legislature could no longer ignore the law, and the PFD would be a settled matter not up for debate each year.

Capital spending: I would rather see our operating budget belt tightened a bit so that we have a better capital budget for our roads, bridges, ports, and other infrastructure for our large and still young state.

Sales tax vs income tax: I support first passing a comprehensive fiscal plan package which likely would include some new revenues but not new revenues in isolation. A tax package is not a fiscal plan (read more here). Passing just taxes is putting the cart before the horse, and I can’t support this ill-conceived approach that will create more problems than it will solve. Trying to fill a gap when we haven’t settled on the sideboards is foolish. We first need to fix the spending cap and settle the PFD in the constitution. These are the sideboards, the bookends, the parameters we need first. We then will know what any remaining gap truly is. At that point, we can then have a robust reduction/revenue debate as to how to close the gap. On the reduction side, we need a bill like SB 9 to pass which would set up the Alaska Sunset Commission. This quasi-independent, objective Commission working on behalf of Alaskans (through a robust audit process followed by legislative action on the recommendations) would ensure our state government is efficient and effective – that we are getting the most bang for our buck and getting rid of what we no longer need (read more here). On the revenue side, I believe any remaining gap should be filled with a balance of taxes that do not deter economic development and do not cause out-migration. Income taxes would do both, so I am not a fan and do not support an income tax at all. A state sales tax, if properly structured and designed to exclude certain items such as groceries, can be made less progressive and fair. Our industry taxes are already very high (we have the highest corporate tax rate in the nation, for example) so businesses are already pitching in for the most part. We need more business in Alaska, not less, so we need to be careful. There are a few areas we could still tweak (for example medical providers who participate in Medicaid should contribute a pay-to-play fee like in other states and the larger fishing vessels – which happen to be primarily from out of state – should be taxed at a higher rate).