I recently sat down with KRBD radio in Ketchikan and discussed the upcoming legislative session with KRBD radio.\u00a0 A partial transcript and link to the full interview are set out here:<\/p>\n
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.<\/p>\n
\u201cWhen you increase taxes, that\u2019s a suppressant,\u201d he said. \u201cAnd then if you cut back government spending, that\u2019s also a suppressant. Now, we need to cut back our government spending. We\u2019re 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.\u201d<\/p>\n
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.<\/p>\n
Stedman said the governor\u2019s budget needs some work. He said Alaskans are willing to do their part, as long as what\u2019s asked of them is fair. Before raising taxes on individuals, Stedman wants to see changes to the state\u2019s oil tax structure.<\/p>\n
\u201cI feel strongly that that has to be on the table before we ask people around the state for all these other tax increases,\u201d he said. \u201cWe have a net profits tax, if there\u2019s 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.\u201d<\/p>\n
Stedman said the various credits in the current oil-tax structure add up to about a billion dollars.<\/p>\n
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.<\/p>\n
\u201cSo, we\u2019ve been inflation-proofing the inflation proofing. And I think it\u2019s time that we take a look at that and have a discussion about that,\u201d he said. \u201cThat\u2019s about $900 million.\u201d<\/p>\n
So, he said, add the oil tax credits and the inflation-proofing, and you\u2019ve got close to $2 billion of the $3.5 billion deficit.<\/p>\n
\u201cThat gives us some breathing room,\u201d he said.<\/p>\n
For more breathing room, there will have to be cuts. Those cuts will be difficult, though, especially after last year\u2019s round of deep spending cuts. Rather than chipping away at departments\u2019 budgets, Stedman said the state should look at reducing its overall footprint, and prioritizing funding.<\/p>\n
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For the full story click on the link below:<\/p>\n