Econ 919 — Budgeting for the state's fiscal future

Jul 9, 2021

Credit Photo: KTOO file photo

Eight Alaska lawmakers are meeting this month to talk through big-picture fiscal issues that have stumped Legislatures for years. 

The Comprehensive Fiscal Plan Working Group is bringing together lawmakers from each of the four caucuses to create recommendations on the state’s budget problems. The plan is to bring those recommendations to the broader Legislature ahead of the Aug. 2 special session in Juneau. 


Nikiski Republican Rep. Ben Carpenter is one of two members in the group from the House minority caucus. He said he’s cautiously optimistic the group can come to some sort of consensus.

“I mean, we’ve got a different structure than we’ve ever had, and that’s a good step in the right direction," he said. "And we’ve got equal membership from all the caucuses.'"

But he said there’s still something in the way.

"We still have a trust problem," he said.

Lawmakers have tried for years to hammer out long-term solutions to the state’s financial woes.

They’ve had little to show for those efforts. And this year — like many of the years before it — the Legislature came close to shutting down, with matters like the size of the permanent fund dividend hamstringing progress on a budget.

Ultimately, lawmakers did successfully pass a budget and avoid a shutdown. One of the conditions was the creation of the working group, which met for the first time Wednesday.

Members of the group said they hope their recommendations will make it to the legislative floor come August.

“I believe that it could be a turning point in Alaska’s history," said Bethel Democratic Sen. Lyman Hoffman, one of the group’s co-chairs.

"The dividend has been a stumbling block for over seven years," he said. "Taxes have been a stumbling block. Drawing funds from several pots within the last 50 years or so has changed the dynamic of how the Legislature works. And I believe that we have the opportunity here to change that course”

The Legislature budgeted a $1,100 PFD in its budget this year but, so far, only set aside half the funds to pay for it. Gov. Mike Dunleavy vetoed that proposal earlier this month, telling lawmakers they needed to come up with a larger number as part of a bigger fiscal fix at their special session.

Dunleavy wants the Legislature to adjust the annual spending from the permanent fund so half of it goes to the PFD and half of it to government services. And he wants to write that formula into the Alaska Constitution.

Opponents of that plan said it would leave too large a hole in the state’s budget.

Carpenter, a member of the House Finance Committee, thinks Dunleavy’s method is the fairest way to do things. He said the way to balance the budget is to first address the PFD problem and then have a conversation about limiting government spending, rather than raising taxes on Alaskans.

He also acknowledged there’s going to have to be a compromise.

"I know there are others that don’t want to see any sort of reduction in the size of government and they just want to raise taxes," he said. "So I know the answer’s somewhere in the middle.”

Soldotna Republican Sen. Peter Micciche, president of the Alaska Senate, said legislators are tired of having the same conversations about the budget over and over. He said the equal representation between caucuses makes the working group unique.

“If something’s going to get across the finish line, it’s going to be a collection of ideas," he said. "And everyone’s going to have to kind of push themselves a little beyond where they’ve typically been comfortable. And I think this group can do it.”

Carpenter said he’d like the group to come up with its recommendations before August.

“I'm not interested in pushing off this special session," he said. "I want this pressure to have some sort of a working product in order for us to debate it on the floors of the House and Senate.”

Carpenter hopes the group will think about what it wants the state to look like in a generation for Alaskans. But he said there’s not much consensus that can happen on those big-picture questions if there’s not first a base layer of trust among members.

To build that trust, he said he thinks it’s important that all eight members have input on how the meetings are run, including what’s on the agenda, and that conversations happen in the open and not behind closed doors.

Hoffman said at Wednesday’s meeting he’d like to see the group meet twice a week. As of Thursday, the group did not yet have a meeting schedule or agenda.

Carpenter said his constituents can email him directly with input on the process at Representative.Ben.Carpenter@akleg.gov.