I recently sat down with KRBD radio in Ketchikan and discussed the upcoming legislative session with KRBD radio. A partial transcript and link to the full interview are set out here:
When the Alaska Legislature reconvenes, the main topic will be the budget. Lawmakers will have to determine how to raise revenue and cut spending. But, Stedman said, the tricky part is how to do both without creating more fiscal problems.
“When you increase taxes, that’s a suppressant,” he said. “And then if you cut back government spending, that’s also a suppressant. Now, we need to cut back our government spending. We’re not going to fix this problem without doing that, but as you add additional economic suppressants, you have to be careful to not push the economy into a recession.”
Gov. Bill Walker has released his proposed budget, which includes an income tax, various other new or raised taxes, a restructuring of the Permanent Fund Dividend program, and many spending cuts.
Stedman said the governor’s budget needs some work. He said Alaskans are willing to do their part, as long as what’s asked of them is fair. Before raising taxes on individuals, Stedman wants to see changes to the state’s oil tax structure.
“I feel strongly that that has to be on the table before we ask people around the state for all these other tax increases,” he said. “We have a net profits tax, if there’s no profit at $40-$50 a barrel of oil, why are we paying out credits in the hundreds of millions of dollars. It makes absolutely no sense.”
Stedman said the various credits in the current oil-tax structure add up to about a billion dollars.
Another area he said should be explored before taxing the public is the annual inflation-proofing appropriation for the Alaska Permanent Fund. Stedman said the state adds the equivalent of inflation back to the principal every year. But, he said, the Permanent Fund portfolio already has inflation-proofing built in.
“So, we’ve been inflation-proofing the inflation proofing. And I think it’s time that we take a look at that and have a discussion about that,” he said. “That’s about $900 million.”
So, he said, add the oil tax credits and the inflation-proofing, and you’ve got close to $2 billion of the $3.5 billion deficit.
“That gives us some breathing room,” he said.
For more breathing room, there will have to be cuts. Those cuts will be difficult, though, especially after last year’s round of deep spending cuts. Rather than chipping away at departments’ budgets, Stedman said the state should look at reducing its overall footprint, and prioritizing funding.
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For the full story click on the link below:
http://www.krbd.org/2015/12/22/sen-stedman-previews-upcoming-session/
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