Speakers on Fiscal Crisis Advise: Do Something This Year

three_spkrs.pngFrom left to right, Diane Kaplan, Pat Pitney, and Greg Chapados.

Kayla Desroches/KMXT

Members of the community gathered in the Kodiak convention center Saturday to hear a community presentation on the state’s fiscal crisis. Various local groups organized the event, including Koniag and the City of Kodiak, and speakers came to educate the crowd on current economic issues and the options ahead. The speakers had different affiliations, but all agreed: we need to do something now.

Pat Pitney is the State of Alaska’s Office of Management and Budget Director and shared a powerpoint with the audience. One graph showed the different areas of state spending, like K-12 education and the Department of Environmental Conservation, and Pitney used it to explain how severe cuts in one area would only make a dent in the overall budget deficit.  

“We could lose the capital budget and have $200,000,000 million of our $3.5 billion deficit taken care of. You could take all of those smaller bars, leave the first three, and we have just met half of the $3.5 billion deficit. You could eliminate every state employee that are paid on unrestricted general funds, and that’s $1.5 billion of a $3.5 billion deficit.”

Pitney said, in addition to reducing spending, one of the main components of Governor Bill Walker’s fiscal plan is to use earnings from the permanent fund. She said part of that plan is the Alaska Permanent Fund Protection Act. Currently, revenue from unstable markets like the oil industry flows into the state’s annual budget, and the act would redirect that flow into the permanent fund. The new plan would protect the budget from the global commodity market’s ups and downs and chip away at the deficit.

“The main components to the plan are, we could draw, if we put all of the oil revenues into the permanent fund, we could draw, and we just used the earnings of the fund with the assumed new oil revenue going in, we could draw 3.3 billion sustainably . Long term. Every year.”

The next speaker was Diane Kaplan from the philanthropic organization, the Rasmuson Foundation, which conducted a series of polls to find out how much Alaskans know about the fiscal crisis and what the public’s opinions are on the issue. The response to one of the questions shows that Alaskans understand the need for legislators to take a stand.

“If your legislator takes no action this year to solve our budget situation, are you more likely or less likely to vote for them or it wouldn’t make a difference? As you can see, 83 percent of Alaskans say if their legislator doesn’t do anything this year, they’re not going to vote for them again.”

The last speaker was Greg Chapados, GCI’s Executive Vice President and Chief Operating Officer and a representative of GCI’s project, Alaska’s Future, which is campaigning for the legislature to use permanent fund earnings to bridge the budget gap. Chapados said that doing nothing this year would have an “enormously high” price.

“The reason it’s so high is because the governor’s plan depends on making changes now so that we can reinforce the permanent fund, reinforce the dividend. If we burn through another 3 to 4 to 5 billion dollars in fiscal year 2017, we’ll have reduced our opportunity to reinforce the permanent fund, preserve the dividend, and fund essential state government.”

Ultimately, it’ll be up to lawmakers how to adapt the governor’s plan.  The legislature convened its legislative session two weeks ago and is slated to adjourn on April 17.

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