Fiscal day of reckoning has been a long time coming

For years, state officials have warned that a day of fiscal reckoning was imminent for Alaska, and that day arrived on Wednesday when Gov. Bill Walker presented his plan for balancing the state’s budget.

Walker’s proposal includes a little bit of everything, from instituting a statewide income tax to pulling money from the Alaska Permanent Fund to budget cuts.

A combination of new taxes and spending cuts will almost certainly be needed to solve the budget shortfall, which is estimated at around $3.5 billion.

That’s a huge gap that can’t be solved by one easy fix. As Walker pointed out in an op-ed piece submitted this week to Alaska media, even if every state employee was laid off it still wouldn’t balance the books.

Now that Walker has proposed a plan, it’ll be up to state legislators to decide where we go from here. The debate over what to cut and where to get revenues is likely to dominate discussion in Juneau this session, and it’s likely to get messy. No legislator relishes the prospect of telling her constituents there’s a new tax to pay or fewer state services in place, and certainly nobody wants to be known as someone who cut the size of Alaskans’ Permanent Fund Dividend checks.

It’s going to be an ugly debate in which nobody is likely to get what they want. That’s just a fact Alaskans are going to have to face.

It’s nice that our state’s politicians are finally facing reality. However, it would have been a lot nicer if they’d owned up to the state’s dire fiscal situation far sooner. For the better part of a decade now, anyone and everyone in state government has warned that declining oil production and prices were going to lead to massive deficits. Instead of making the hard decisions they’re paid to make, our politicians have continued to play the spending game, creating bloated budgets and shying away from new taxes and meaningful cuts that could have eased Alaska’s transition to this new economic reality. They’ve essentially crossed their fingers, hoping that some mega-project or giant oil strike would bail Alaska out once again. That hasn’t happened.

Had our elected officials acted years ago to prepare for the realities of declining oil revenue, it’s likely Alaska would be much better prepared for the days ahead.

Keep that in mind in the coming months, when politicians in Juneau and Anchorage try to shift the blame for new taxes and cuts to state programs away from themselves. The truth is that our elected officials have known for years that this day was coming and have done next to nothing to prepare. Unfortunately, we’ll all pay the price for our legislators’ inability to do their jobs.