At the invitation of Daniel Hamm, the Chair, yesterday evening I spoke to the regular monthly meeting of the Alaska Republican Assembly. Dan had asked that I brief the organization on the current status of the Alaska budget. The title of my presentation was “How to Finish This Session with a Sustainable Budget (and economy).”
The presentation focuses on four issues:
- What level of revenue should the budget use as a baseline.
- Oil & gas tax credits.
- The Operating & Capital budgets.
- PFD cuts and other taxes.
Because it has become the defining issue of whether the FY 2017 budget will be able to achieve sustainable levels, a large part of the discussion focused on the issue of oil & gas tax credits. As some will know, the House Rules Committee had released a working draft of a proposed compromise earlier in the day and there was some interest around whether that resolved the issue. As I discuss in the slide deck and have explained further this morning in another post, it does not.
Another substantial portion of the discussion focused on the significant adverse effect on the overall Alaska economy of the various proposals currently pending before the legislature permanently to cut the level of the Permanent Fund Dividend and direct the difference to government revenue. As I explained using the recent analysis by the University of Alaska-Anchorage’s Institute of Social and Economic Research (ISER), while the proposals advantage the government economy and those that benefit from it, they have a serious and significant adverse effect on the overall Alaska economy.
The central theme of the presentation as with others before it, is that Alaska would benefit from — and should use as its governing budget model — the sustainable budget approach developed by Dr. Scott Goldsmith of ISER. The presentation focused on how close the current FY 2017 budget is coming to that model and what the implications are of the various proposals that have been and are still under consideration that deviate from that approach.
The presentation generated a healthy question and answer session following. I greatly appreciate the opportunity to have engaged in the discussion.