Frank talk about revenue is overdue

This editorial was originally printed in the Sunday edition of the Fairbanks Daily News-Miner.

Fiscal reckoning in a time of budget deficits is never easy. That’s particularly true when the deficit is as monumental as the one Alaska faces now.

Even after nearly a billion dollars in cuts this year to the state operating budget, the Legislature will report to their next session with the state more than $3 billion in the red. Many Alaskans who haven’t followed the fiscal situation closely still believe there are easy answers that won’t involve shared commitment and sacrifice by the state’s residents. To put it plainly, those who maintain this belief are kidding themselves.

The road ahead will be contentious, and the discussion on charting the state’s course to a sustainable budget will involve many conflicts of vision. But it’s a discussion that must take place, because we can’t afford to maintain a willful ignorance about Alaska’s fiscal reality.

During the legislative session, the cuts made by Gov. Bill Walker and the Legislature were abstract, as were the few proposals for increasing state revenue. When the cuts took effect this week as the 2015 fiscal year ended and fiscal 2016 began, the reaction from Alaskans who hadn’t followed the budget process was dismaying.

In response to the minor increase to taxes on refined fuel that will go toward paying for cleanup of fuel spills, some residents expressed outrage. They called Gov. Walker — a former Republican who this year made the biggest cuts to the state’s budget in a decade — a tax-and-spend liberal.

They called for cuts to administration, apparently ignorant of the fact that cuts of more than 20 percent have already been made to the departments of Commerce, Community and Economic Development, Education and Early Development, Labor and Workforce Development, Natural Resources and the governor’s office itself.

At the same time, the cuts made in Juneau were starting to be made real around the state, and some responses to those cuts are similarly dissociated from Alaska’s budget reality. Citizen anger over the closure of highway waysides by the Department of Transportation was sufficient to lead Gov. Walker to reallocate funds to keep them open through the summer. But that money had to come from elsewhere in the budget.

At the same time, more consequential cuts will be felt soon throughout the state. The Alaska State Troopers’ cold case unit will wind down Tuesday, and posts in Girdwood and Talkeetna will close. Some small communities along the ferry system will not see service for a month in January and February 2016. …

In light of this reality, the best time to talk about what we want Alaska’s government to look like and how we plan to make that happen is now. Much of what can be cut with little impact to residents has been cut already. Next year’s budgeting process will likely include more cuts, though what can still be pared back won’t make a dramatic difference to the deficit.

The larger part of the budget solution will have to come through increased revenues. That will mean not only taxes, but also the state’s most politically dangerous rainy-day account — the Alaska Permanent Fund earnings reserve.

Historically, Alaskans have treated any discussion of tapping the earnings reserve to help pay for state government as anathema. We no longer have that luxury.

We’ve been having our cake and eating it for decades since the discovery of oil at Prudhoe Bay made the state rich. Eventually, we have to pay for that cake, and there are ways to do so — such as the Alaska Permanent Fund Corporation’s Percent of Market Value plan — that won’t dip into the corpus of the fund and “burn the house to keep warm,” so to speak.

Until we have the courage to have a frank discussion about the budget, our political leaders aren’t likely to acquire that same courage themselves.

It’s time to figure out what we want our state to look like and how we plan to pay for it.