Senate majority lays fiscal burden on most needy Alaskans

Many believe that Alaska can't get to sustainably filling the multibillion-dollar budget gap without touching the earnings of the Permanent Fund. It's the first part of this year's three-legged solution that the House majority is trying to build, with oil tax adjustments to reduce incentive payments and increased revenues being the other legs of the stool.

While I'm on this stool metaphor, it's important to know it's really a four-legged stool. For the last three years, reducing government spending has been the first leg and the primary focus. As of now, after adjusting for inflation, the state's 2017 budget, on a per person basis, is the lowest it's been in 10 years and more than 55 percent of this budget goes for K-12 education and health and social services. In other words, laying off hundreds of state workers, zeroing out the capital budget and cutting education, ferries, Alaska State Troopers, revenue sharing to municipalities, etc. — all are part of the "reduce spending" leg, which now is considerably shorter.

Fiscal planners and observers have known that re-structuring the Permanent Fund would likely be the next piece to be assembled.  So it's not surprising that the Senate recently acted to reduce dividends. But what is surprising is the context and how they went about placing the burden on those who can afford it least. In defending the Senate's recent action to reduce the Permanent Fund dividend to $1,000, Sen. Anna MacKinnon, co-chair of the Senate Finance Committee, explained: "Alaska has a problem and that problem is that our revenue doesn't meet expenses and we've been drawing from our savings account for the past five years. We don't have a lot of choices left."

[Alaska Senate again passes bill to spend Permanent Fund earnings]

Although the Permanent Fund dividend is not an entitlement and as such is fair game, the real beauty of the program is that by treating all Alaskans the same, the income benefit helps the poor the most. A December 2016 study done by the nonpartisan Institute of Social and Economic Research showed that the dividend "lifted about 25,000 Alaskans out of poverty in 2015." The report notes that "on average over the past five years, the PFD has reduced the poverty rate in Alaska from 11.4% to 9.1%."

Now, with dividend checks capped at $1,000, the effect of lifting Alaskans out of poverty will be significantly diminished. While using the Permanent Fund earnings and affecting the dividend may be unavoidable, the Senate majority went further than necessary. They turned the "shall appropriate for Permanent Fund dividends" into a "may appropriate." In other words, the PFD of $1,000 is now up to legislative whim, not legal requirement.

What makes this action particularly hurtful is the "refusal attitude" of the Senate majority to consider building the other legs of the stool. Somehow, the urgency of the fiscal situation does not apply to having large international oil companies kick in a little more — at least so we're no longer giving out more in production credits than we're taking in from production taxes received. Nope, that's not part of the Senate majority's agenda. Nor does the urgency of the fiscal crisis justify taxing the 90,000-plus out-of-state workers, some of whom have six-figure incomes. Instead, it appears that for the Senate majority, the fiscal urgency only applies to taking action that will hurt struggling Alaskans the most.

[Proposed cuts from Alaska Senate would hit ferries, health care for poor and disabled]

When kids, seniors, communities and now the poor all have skin in the game, why can't we expect big oil to chip in, particularly when this year alone, SB 21 requires the state of Alaska to account for $413 million in oil tax credits. According to conservative Sen. Bert Stedman, R-Sitka, in a March 2016 interview with Alaska Dispatch News: "SB 21 is a complete failure. It leaves the state extremely exposed on the downside with no ability to make it up on the upside."

If the fiscal crisis is severe enough to warrant burdening Alaska's poor, then is it not serious enough to warrant fixing a flawed tax structure? Shouldn't the basic principle of fairness come into play here?

This is the battle of the session. Do we model President Trump's one-sided budget playbook – tax cuts at the top, throw millions off health care, cut Meals on Wheels for more military funding? Or do we rise above and take a fairer, balanced approach called for by business leaders and former legislators?

In a January 2017 op-ed, retired banker Ed Rasmuson, former Commissioner Bill Corbus, energy consultant Jeff Cook, Bering Straits CEO Gail Shubert and Kenai Mayor Mike Navarre called for a mix of options to build a fiscal plan. It's time to read this op-ed again.

As of right now, the Senate majority has not given us a fiscal plan. They've only given us a page out of Trump's playbook – hit the needy first.

Kate Troll, a longtime Alaskan, has 22 years of experience in coastal management, fisheries and energy issues. She is a former executive director of United Fishermen of Alaska and Alaska Conservation Voters, and has been elected to local office in Ketchikan and Juneau. Her book, "The Great Unconformity: Reflections on Hope in an Imperiled World," has just been published. She lives in Douglas.

The views expressed here are the writer's and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary@alaskadispatch.com. Send submissions shorter than 200 words to letters@alaskadispatch.com.