A do-nothing Legislature would only deepen fiscal crisis

Much has been said and written about the importance of the upcoming legislative session in Juneau, and more free advice will surely be doled out to legislators between now and Jan. 19 when the gavel falls.

The state is at a major fiscal crossroads, with revenue from oil production declining so fast that Alaska — which just a few years ago was the financial envy of the nation — now faces severe budget deficits for the foreseeable future.

Most folks seem to agree that in order to close what looks to be a $3 to $4 billion hole in the budget, state lawmakers will have to agree on some combination of cuts, taxes and withdrawls from savings.

Fortunately, Alaska is lucky enough to have huge cash reserves in the form of the Permanent Fund, which is worth more than $50 billion, as well as more than $8 billion in the Constitutional Budget Reserve and another $5 billion or so in the Permanent Fund’s Earnings Reserve Account.

And there’s the rub.

Raising taxes, cutting services or “raiding” the Permanent Fund are not popular ideas among voters. Folks in Alaska have gotten used to oil revenues paying the bills, and many are loathe to start reaching for their pocketbooks any time soon.

Our elected officials are thus faced with a hard choice. They could act responsibly, make difficult and unpopular choices and figure out a way to get us on the road to a balanced budget. On the other hand, they could do nothing.

This option, while irresponsible, makes a lot of sense politically. After all, there’s an election coming up in November, and most legislators like getting re-elected. So because the state still has about a decade’s worth of savings, the Legislature could decide to punt.

This might be a very attractive option for many of our elected officials. They could conceivably make a few token cuts to say they did something without actually having to address the problem at hand.

We hope this doesn’t happen.

Already, agencies are downgrading Alaska’s credit rating as a result of the shaky financial picture. If nothing is done this session, it’s likely Alaska will fall even further out of favor in financial circles. After all, it’s hard to believe someone will be able to pay their rent if they’re eating lobster and caviar every night.

We don’t envy them in their challenge, and it’s our sincere hope that bipartisan cooperation and creative thinking in Juneau will result in an outcome that helps pull the state out of its financial tailspin.

Although it might be unpopular — and could even cost them their jobs — Alaska legislators need to do the right thing and make the hard decisions they’ve been elected to make.