Incoming leaders in the 2017 legislative session provided a taste of battles to come in Juneau after lawmakers gavel in Jan. 17. Incoming Senate President Pete Kelly, R-Fairbanks, and Rep. Chris Tuck, D-Anchorage, who will be majority leader in the new coalition state House, spoke Jan. 5 to members of the Resource Development Council in Anchorage.
Oil taxes, state fiscal reforms and proposed new taxes will be on the Legislature’s agenda.
“Alaska is going through a very tough transition period,” Tuck said. “We can no longer depend on oil as our main revenue source. It’s good to see production up (for 2016) and oil prices creeping up, but an oil price increase won’t save us,”
“Spending cuts will have to continue but we need to ensure we can provide basic services like public safety and to ensure continued investment in education. We need to make ‘smart decisions’ that won’t hurt the economy,” he said.
The goals of the new House coalition will be to, “protect the economy, ensure jobs, to support education and ensure that government isn’t the ‘enemy’ of economic growth. We can’t live beyond our means, but we know we can’t ‘cut’ our way out of this. There will have to be new revenues,” Tuck said.
“People will be upset, but we will work to make sure that one group is not burdened at the expense of another. This will not be easy,” he said.
There will be continued work on oil tax credits in the House, Tuck said, mainly to complete things not accomplished last year in House Bill 247, a comprehensive tax credit bill that passed. “One thing we want to do is to understand who is getting these credits and make sure the people who really need them are receiving them,” he said.
He said the state does need to honor unpaid tax credits from the past, and that this is “a debt that is owed.” A comprehensive state fiscal reform package to be considered should include a way to pay these, he said.
Kelly, the incoming Senate president, agreed with Tuck that it could be a heated session, and he said the Senate majority will likely oppose measures that tend to redistribute wealth (a reference to taxes) and ideas of ‘going after those who produce’, a reference to proposals from the House to tinker again with oil taxes.
He said the incoming Senate leadership will “have a cohesive strategy” in a response to the fiscal problem, one with “a bias toward continued spending cuts … but nothing is off the table,” a reference to possible new revenue sources.
He credited the Legislature with making dramatic reductions in spending in recent years, which is not always understood by the public. “In 2014 we were spending $8 billion a year in general fund spending. We reduced this to $7 billion the next year, to $6 billion and $5 billion in the following two years, and now to $4.3 billion,” he said.
“While a lot of this was in the reduced state capital budget there has also been a reduction, $1.2 billion, in the operating budget in the last two years,” Kelly said.
Systematic changes
He also cited the systematic changes in state programs to slow the steady creep of spending increases.
A major Medicaid “reform” bill, Senate Bill 74, passed the Legislature last year and should result in $400 million in annual savings in six years, Kelly said. Similar reductions will come through a comprehensive crime reform bill, Senate Bill 91, passed last year. Kelly said Republicans and Democrats worked together on those measures.
Five principles that will personally guide Kelly include keeping government’s role in the economy limited; to recognize the importance of both public and private employment but with a higher priority given to stimulating private jobs; to recognize that government does not provide wealth, but that the private sector does; that some government programs are ‘hard-wired’ for growth, and need vigilance, and that while Alaska should get its “fair share” of oil revenues the overall goal should be to increase production.
