Strong language used in council statement to legislature
City government set to pass resolution urging legislature to take action
Valdez Star file photo
Gov. Bill Walker
Act now. Be decisive.
That is the message the Valdez City Council was poised to send to lawmakers Tuesday night in the form of a resolution urging the Legislature to address the state's fiscal crisis by not depleting its reserves and avoiding cuts that could contribute to a recession like the one that rocked the state in the 1980s.
"WHEREAS, while spending reductions must be a part of any balanced fiscal solution, extreme care must be exercised to not inadvertently cut our way into an economic recession as was done in the 1980's," a section of the resolution reads.
According to the agenda statement attached to the resolution, council was asked to take the action by none other than John Hozey, the city's former city manager who is now Gov. Bill Walker's deputy chief of staff.
The city council resolution has no legal weight - it is merely an advisory to the governor and the legislature of the wishes of the city government of Valdez.
The legislature gaveled in Tuesday morning and the Walker administration is looking to rally support for its budget proposal that includes measures often considered taboo to Alaskans - and therefore lawmakers: income taxes and using permanent fund earnings.
Walker enlisted the aid of Attorney General Craig Richards to be the face of the permanent fund reconfiguration. He said the recalculation of dividend payments to help balance the budget is critical to its success.
In the last legislative session, large cuts to the state's budget were made but even some of the most staunchly fiscal conservatives have agreed that budget cuts alone will not fill the state's vast fiscal gap - the difference between the actual cash it has to spend and the amount of cash it needs to pay for government at its current spending levels.
Lawmakers opted to use budget reserves - cash on hand it keeps for a rainy day - to close last year's budget gap.
Additional cuts of $700 million is a number heard frequently regarding the next state budget, but critics point out that still leaves the state in the hole by billions of dollars and that additional revenues will be needed.
Earlier this month, Walker instituted a statewide hiring freeze and ban on non-essential travel - measures that were already widely in place in a number of state offices.
"As we work toward plugging the $3.5 billion hole in our budget, it is critical that state employees continue to take every step possible to ensure we are being good stewards of our resources," Walker said during a press conference Jan. 5. "As we worked on our fiscal plan, the comment my team and I heard most from Alaskans is that we must continue to rein in spending. Much thought and discussion have gone into each cut we have made and will make. Many agencies and departments have already implemented these cost-cutting measures."
Sin tax - an increase to the amount consumers of alcohol and cigarettes would pay at the register - is included Walker's budget proposal.
This includes adding an additional $1 tax to a pack of cigarettes and adding 10 cents to the cost each serving of an alcoholic beverage. This would apply to beverages purchased in a bar or restaurant, as well as alcohol purchased in a liquor store.
The administration is also eyeing other tax-based revenue sources aimed at industry and changes to the state's oil tax credit system.
Oil, which pays for - or once paid for - the bulk of the state's spending, recently dipped to $30 a barrel, well below the $60 price it was fetching last year at budget time.
"Tackling our state's budget problems is going to require a combination of continued spending cuts and new revenue," Walker said recently. "With the help of the legislature, we reduced state spending by nearly $1 billion last year, and eliminated 600 state positions. While we cannot balance the budget with cuts alone, it's important that we continue to look for budget efficiencies throughout our state system."
Walkers budget proposals have not been fully embraces by the Legislature.
A number of Legislators, including Sen. Mike Dunleavy, have eyed permanent fund earnings as a solution to filling the state's fiscal gap. However, not all legislators agree with Walker's approach.
According to the Associated Press, Walker's administration has estimated the state could annually begin drawing $3.2 billion from permanent fund earnings to help finance state government while still paying out an estimated $1000 per Alaskan each year.
A number of Republican lawmakers say a hybrid reconfiguration could make more sense.