As we near the general election, it is worth stepping back and reflecting on what’s ahead. Beyond the immediacy of ballot measures and candidacy, or the public health emergency, lies a future of challenging decisions that are both more significant than ever and yet very similar to decisions Alaska has always faced. The Legislature that emerges from the election will need to be committed to addressing systemic issues without creating a host of consequences that negatively affect our residents and economy.
It does not just boil down to payment of a Permanent Fund dividend. Solutions do not rest just on budget cuts or “reforms” nor just on sustaining government on the earnings of our resource wealth. We’re at a point where we can’t address our fiscal challenges with just one solution, even as we work toward just solutions. The legacy of this generation’s legislative leadership will rest on its ability to meet today’s needs and address systemic challenges, such that the legacy of today’s leaders will not place that burden on future generations.
When it comes to fiscal policy, let’s approach it as such — standards and guidelines for decision-making. A local government approach to fiscal policy includes the potential for tax increases, relief or stabilization; increased, stable or reduced staff or service delivery; emergency reserves consistent with governmental financing protocols; limits to spending, responsiveness during crisis, multiple fund sources, etc. There aren’t tools left off the table, and the overall commitment is to a balanced budget that promotes growth and stability. Keep in mind that residents in these communities directly fund their governments through taxes and fees; there’s a high level of accountability.
The same principles apply at the state level. Candidates, newly elected officials and sitting legislators will have to be able to answer and work with one another to address:
• What is the right level of emergency reserves, or savings that the state should have on hand?
• Do budget reductions promote growth and stability? Does need go away, or who picks up the responsibilities to address that need? Is there capacity to do so elsewhere?
• Does cost-shifting to local governments only serve to increase the tax burden within those communities it applies to, and is that fairly distributed?
• To what should a spending cap apply, how will it be implemented, and does it make sense as a priority during half a decade of budget deficits?
• What is Alaska’s tax base and burden, how is that different across different regions of the state, and what impact would increases have?
• Are there good ways to tie Alaska’s government revenues to its actual economy, and increase accountability beyond the price or flow of oil, or market returns? Does doing so increase responsiveness to Alaskans' needs and expectations, as well as increase accountability?
That’s a short list of questions but it should serve as a starting point for the development of a state fiscal policy that doesn’t push decisions to future Legislatures or costs to future generations. In fact, the outcomes of that decision-making process increases the likelihood for investment in today.
Part and parcel to this approach is to look at systemic issues — decades-long discussions to which it is important that we renew our commitment. From a municipal perspective, these broader challenges include:
• Overcoming the state’s unfunded pension liability and working to reduce not just the state’s burden but that of all employers — we need a long-term fix for our pension systems (Public Employee Retirement System and Teacher Retirement System) that decreases the costs of providing these benefits, which right now are costing employers $1 out of every $6 they spend on payroll.
• Completing the state’s work to encourage borough formation, ensuring proper incentives and coming to an equitable allocation of responsibilities consistent with tax base — this negotiated process should result in the local delivery of services that can be afforded at the local level, and continued state support to offset those costs.
• Fulfilling the state’s lawful obligations to reimburse for mandated property tax exemptions, appropriately fund school construction and major maintenance, and ensure state aid to local governments through the Community Assistance program.
All of these contribute to strengthening a partnership between the state and local governments that has eroded over time, and which ultimately falls back on local businesses and taxpayers. For this next Legislature, commitment to these issues is critical now; it will require hard work and negotiation, and will leave a legacy of growth and prosperity that today’s voters and all future Alaskans will benefit from.
Nils Andreassen is the executive director of the Alaska Municipal League, a membership organization of all cities and boroughs in Alaska. AML provides support services and advocacy on behalf of members. Andreassen has a background in policy development, northern issues, and governance; he lives in Juneau.
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