Governor asks lawmakers to come up with ideas to solve the $1.5B deficit

Published: Jan. 30, 2020 at 5:45 PM AKST
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Gov. Mike Dunleavy is asking lawmakers to come up with ideas to bridge the state’s fiscal gap saying he has bills on the table introduced last year to rein in spending.

The governor addressed the Alaska Chamber of Commerce on Thursday, touting the potential of the state’s mineral wealth for additional revenues. “Alaska’s resources are top notch,” he said.

What to do with the state’s mineral wealth if there is a boom remains a question yet to be answered.

The governor said he would like to see infrastructure investment to spur new business opportunities. Conversely, Dunleavy has also spoken about the need to implement a spending cap.

“The question is, do we spend that again?” The governor asked.

There has been some interest in the Legislature to implement a tighter spending cap. Rep. Lance Pruitt, R-Anchorage, told the Alaska Chamber that it is “the number one thing” lawmakers should be discussing but it could be difficult to pass in an election year.

Sen. Tom Begich, D-Anchorage, said a constitutional spending cap should only be implemented as part of a broader fiscal plan.

Some in the Legislature have criticized the governor for not providing enough direction for how to bridge a $1.5 billion deficit created in part by adding a full Permanent Fund dividend into his proposed budget.

“But I would ask you, to ask them, what their ideas are?” The governor told reporters after the Thursday address. “There are 60 of them, surely they have ideas to solve this.”

Sen. Click Bishop, R-North Pole, has introduced legislation that would create an education head tax, raising roughly $13 million per year from residents and non-residents. The $30 tax would be levied from a taxpayer's first paycheck of the year.

Bishop also introduced a bill that would double the motor fuels tax from $0.08 cents to $0.16 cents which is estimated to raise $30 million a year.

An oil tax initiative is also moving forward that advocates say could raise $1.2 billion per year. Representatives from the oil industry warn that a tax hike could spurn investment.

During a press conference with the House majority caucus on Monday, legislators said there are currently no plans to introduce a broad-based tax like a statewide sales tax or income tax. Instead, the focus is on evaluating whether the Permanent Fund dividend formula should be changed.

“If we don't solve the dividend problem, it will always muddy the water on what exactly we are looking for on a deficit,” said Rep. Chuck Kopp, R-Anchorage.

Dunleavy has said repeatedly since being elected and again during his State of the State address on Monday that any changes to the dividend formula should go before a popular vote.

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