Juneau Update 02-07-02
In 1979, Governor Jay Hammond presented the first billion-dollar budget in Alaska's history. Next year we face a billion dollar shortfall in the budget. In less than a quarter of a century we have undergone significant change, not only in how we govern and how we pay for the operation of our state, but in our attitudes. The state's general fund spending averages $3,800 for each person. This provides for public services such as schools and roads. In addition, those qualified have received a Permanent Fund Dividend for the past 20 years. This accounting doesn't cover the billions of dollars pump into our state each year.
I am facing the hard choices of continuing business as usual and giving money piecemeal to entities such as Arctic Power (a lobbying firm for opening up ANWR), ASMI and Tourism to the tune of $9-$12 Million, or insisting that we, the legislature, step up to the plate and create a fiscal plan that will move Alaska forward.
The New Renewable Resource
Our economic well-being has been tied to the price per barrel of oil and the wealth of the Permanent Fund. This unique public savings account was created by a public vote on November 2, 1976.
A quarter of a century ago, the Permanent Fund was first funded with an original deposit of $734,000 in state oil revenues. The Fund has grown beyond all expectations. Elected representatives wisely inflation-proofed the Fund and deposited nearly $7 billion in special appropriations to grow the Fund.
Since oil hit peak production in 1988, state oil revenues have been in decline ever since. For the first time ever, 1998 income from the Permanent Fund surpassed state oil revenues. Unlike oil, which is a non-renewable resource and will one day be gone, we have the ability to continue to keep the Permanent Fund alive and growing.
Prior to fiscal year 1991, the state's recurring revenues and recurring expenditures were essentially equal. State operating budgets were balanced solely with recurring general fund revenues. Beginning in fiscal year 1991, and in each subsequent year except fiscal year 1997, the Legislature has balanced the state budget by appropriating sufficient money from the Constitutional Budget Reserve fund (CBR) to cover the shortfall between recurring revenues and expenditures. This is in spite of five years of budget cuts enacted by the Republican majority equaling $250 million.
Through 2001, Alaska has spent nearly $4 billion from the CBR. Currently we have $2.56 billion remaining in the CBR. In the fiscal year 2003, it is estimated we will spend another $900 million of our savings. If oil prices continue to remain below $20 a barrel, we will have to take out another $1.2 billion to balance the budget in FY 2004. This means by sometime in 2004-2005 our savings will be exhausted.
I will continue this discussion in future columns to explain how we fund government and the challenges we are facing to continue to pay for essential services.
I have introduced SB 248 extending the sunset of the Council on Domestic Violence and Sexual Assault (CDVSA) until June 30, 2006. The CDVSA is the state policymaking board charged with planning and coordinating services for victims of domestic violence and sexual assault.
Last fiscal year over 7,000 Alaska women and children received services in shelters throughout the state. This totals more than 50,000 shelter nights. There were also more than 2,000 victims of sexual assault who sought services through the state. The CDVSA has services for families of victims as well as perpetrators of these crimes by providing crisis intervention and prevention programs throughout Alaska. The programs provided by the Council come from state, federal, and private funds.
I have also co-sponsored SB 271 with Senator Jerry Ward. This legislation would create a combined "Alaska Marine And Rail Transportation Authority." This legislation would merge the Alaska Marine Highway system, currently operating at a deficit, with the Alaska Railroad, which annually generates large surpluses. By placing both state transportation systems under a single new authority, the people of Alaska would benefit through more efficient management and operation, as well as reduced costs. The end result is better coordination of the state's transportation needs. Establishment of such an authority board would bring maritime experience, accountability and continuity to the management of the Alaska Marine Highway System.
I have introduced Senate Joint Resolution 33. This proposes an amendment to the Constitution of the State of Alaska relating to limiting the rate of state income, sales and use taxes. The cap would be no more than a five percent tax unless by a vote of the people a decision was made to raise that amount. This will ensure that there is no state tax higher than five percent that is imposed on the people without their consent. By comparison, Governor Knowles proposed a seventeen percent income tax. As we go through committee, this five percent will be discussed and it could go up or down in the final bill.
I have recently introduced SB 277, which will provide for equal state taxation of all sectors that the Bering Sea Pollock cooperatives created under the American Fisheries Act (AFA). Currently, factory trawlers, shoreplants and motherships all pay 3% fisheries business tax under AFA, while floaters that process Pollock pay 5%. We have a couple of Alaskan floating processors who are not being fairly taxed because of this.
I have been very happy with the turn out at our Fish Caucus meetings so far this session. As the chairman of this educational forum about fisheries issues, I'm giving the fishing industry a higher profile here in the legislature. Our first meeting was held on January 23rd and involved a presentation by Chris McDowell, an expert on fisheries economics. The meeting was very well attended. There were 14 legislators present, several of them from the Anchorage area. McDowell covered some of the numbers relating to the crisis in the salmon industry, as well as some overviews of the situation of our groundfish and shellfish sectors. Most importantly he directed some of his analysis towards the Anchorage contingent in order to demonstrate that commercial fishing is important to the entire state economy. This is part of my effort to reach out to urban legislators for support in these critical issues.
The second Fish Caucus meeting was held on January 31st and was our best-attended meeting since the inception of the caucus last year. Over 100 people were in the room, including people from various sectors of the fishing industry from UFA to Fish & Game folks and several independent fishermen. Oliver Holm and Duncan Fields of Kodiak were there and asked several good questions. This meeting was a general overview of several bills that Representative Drew Scalzi has introduced this session. They include bills to designate seats on the Board of Fish, allow for industry funded permit buy-backs in fisheries that choose to do so, and a bill that would allow for permit stacking, amongst several other fisheries related pieces of legislation. I am encouraged that many legislators are taking the commercial fishing industry very seriously this year. The Fish Caucus will continue to be a positive forum in which to maintain that interest and inform legislators so they can make good decisions about fisheries legislation. I've always maintained however, that any changes we make should have broad support from the industry. Rest assured I am making it clear that the legislature cannot be heavy handed in how we respond to the needs of the whole industry.
If you would like to participate in the Fish Caucus you may watch the meetings on Gavel-to-Gavel TV or listen in by teleconference at the LIO, 112 Mill Bay Road. You may also call in from home and listen over your phone, (if you have a speaker phone) at 1-888-263-1555. Please contact Ian Fisk of my office if you have any questions or suggestions. He can be reached at 1-800-865-2487.
Five King Limit
Thanks to all of you who took the time to call me or send a Public Opinion Message with your concerns about the new five king salmon harvest limit. This recent Board of Fish decision has many shaking their heads in Kodiak.
Recognizing that the recent Board of Fish decision limits the number of king salmon harvested to five per resident and non-resident per year, I am pursuing this issue with the Department of Fish and Game and the Alaska Board of Fish. I am presently speaking with board members to try and establish what the rationale was used for such a decision. There appears to be no new biological findings to support this new limit in the Kodiak area.
I feel this decision is not in the best interest of the citizens of Kodiak. Traditionally people have not had such a restriction for their year-round consumption. Those people who have invested in diversifying the economy with charter operations will also be affected. The Board went down this road once before then rescinded the action. However, they appear to be dug in on this decision at this time. I am in contact with the Kodiak working group opposing this action. I will follow-up on this board decision and keep the community apprised about any information I find or solutions that can change this new king salmon harvest limit.
There have been lots of Kodiak folks in Juneau for assorted meetings and lobbying efforts. The following people have visited my office within the past two weeks: Andy Lundquist, Louise Stutes, Pam Foreman, Dwayne Dvorak, Oliver Holms, Thom Wischer, former resident Walt Ebell, Duncan Fields, former resident Kristan Holzshu, Pat Carlson, Gabrielle LeDoux, Scott Arndt, CeCe Esparza, Linda Freed, Carolyn Floyd, Barbara Stevens, Charles Davidson, Tom Walters, Dave Woodruff, Don Roberts, Pat Branson, Jerome Selby, and from Larsen Bay, Alan Panamaroff, Alex Panamaroff, Mike Carlson, and Fred Katelnikoff.
Remember, my door is always open.
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