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Idealistic town hall vision at heart of Walker's major public policy sessions

  • Author: Dermot Cole
    | Opinion
  • Updated: September 28, 2016
  • Published June 4, 2015

FAIRBANKS -- In 2004, not long after Gov. Frank Murkowski called a "Conference of Alaskans" to make decisions about the Permanent Fund and deal with the Alaska fiscal crisis that everyone believed was at hand, the Legislature found reasons to procrastinate.

Oil prices had climbed to $37 a barrel, creating cause for jubilation.

As had happened several times in the past, the deficit dwindled, along with the energy to enact a sustainable fiscal plan based on an unpopular combination of taxes, Permanent Fund earnings, spending cuts, etc.

"It's very difficult for us to talk in resolute terms that we have a storm brewing when the sun is shining so brightly," North Pole Republican Rep. John Coghill told a reporter at the time.

Eleven years later, and there are storms on the horizon. After a spectacular rise and sudden fall in state finances, there is a near-consensus that changes are needed to align income and outgo, which is the justification for Gov. Bill Walker's attempt to start building a statewide consensus about the state financial future this weekend in Fairbanks.

Reaching agreement on exactly what those changes need to be is a far more daunting prospect, judging by past attempts at creating a fiscal plan, all of which ended far short of consensus.

The signs point to a more immediate financial threat because the dollar numbers are far larger and the budget imbalances are less likely to be erased by a rise in oil prices. Oil production is about half what it was in 2004, and the gap between oil income and spending is marked in billions of dollars, not hundreds of millions. Spending is higher, state services have grown and major cutbacks will take an economic toll.

True, the Permanent Fund is twice as large as it was 11 years ago, but its place in Alaska's fiscal future remains as uncertain as ever -- with most elected officials wary of any false step that could end their careers the next time they face the voters. The Constitutional Budget Reserve may last a few years, but it is being spent at a rate of more than $8 million a day.

The multiple connections that link state spending, the level of state services and the sources of state revenue have proven to be difficult to adjust in a place that has relied on almost nothing but oil since 1980.

When he announced the Fairbanks meeting, Walker envisioned it as the first step into the next chapter of Alaska finances. That the legislative budget battle continues over the spending details for the fiscal year that begins in a little more than three weeks is a hint of the task that lies ahead.

The idealistic notion that Walker is tapping into is similar to that pursued by Murkowski -- that no problem in Alaska is so challenging that something can't be gained by getting people from across the state with different opinions to discuss it. In theory, if perhaps not in practice, the Legislature works this way.

The example most frequently cited as the civic model is the 1955-56 experiment in which 55 people wrote the Alaska Constitution at the University of Alaska campus in Fairbanks. Murkowski hoped to evoke the memory and the spirit of cooperative effort when he proposed 55 delegates should gather at UAF to decide how to fit the Permanent Fund into future finances.

There have been many attempts in Alaska to try to capture the town meeting atmosphere and deal with the big questions facing the state by getting a group together. In 1969, on the suggestion of Rep. Gene Guess, D-Anchorage, the state invited the Brookings Institution to convene "A Conference on the Future of Alaska," a series of sessions at which 100 Alaskans considered the future.

They debated the environment, human resources, the financial foundation of Alaska and "alternative futures," in light of the unbelievable wealth represented by the $900 million North Slope lease sale. The tenor of the discussions about Alaska fiscal policy began to change in the late 1980s, with the growing realization that the oil boom couldn't last forever.

But the forecasts about impending collapse proved time after time to be correct only in part. Whenever oil prices rose, the pressure dissipated.

In 2004, when Murkowski called for the Conference of Alaskans, he wanted the discussion limited to the use of the Permanent Fund to deal with what looked like an everlasting deficit.

Just as soon as the group began meeting, it rejected those limits. It took on the tax question and suggested that the state look for alternative ways to pay for government. Former Gov. Jay Hammond, who was not on the agenda, may have attracted the most attention with a complicated plan that called for dedicating the Permanent Fund to dividends and instituting a graduated income tax.

Responding later to critics who said the math didn't work, Hammond said: "Don't get distracted with the nits. Look at the carcass of the creature itself."

The Conference of Alaskans endorsed a constitutional amendment to change the way Permanent Fund income is distributed so it would be a percent of market value, not yearly earnings. It also endorsed the concept of using some earnings to pay for government services and keeping a minimum balance in the Constitutional Budget Reserve.

None of the ideas won legislative approval in 2004.

The prevailing legislative philosophy of the moment may have been best expressed by Fairbanks Sen. Gary Wilken: "One of these days we will have to do something," Wilken told reporters. "We don't have to do something today."

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