The second session of the 30th Alaska Legislature is officially underway. Despite last year’s extended sessions that brought the state to the brink of a government shutdown, Senate leadership appears optimistic that the session may end within the first 90 days. The budget is a top priority for legislators this session, with the state’s annual budget deficit reaching $2.7 billion.
“Any second session is somewhat a continuation of the session before because all of the bills are still live,” Fairbanks Republican and Senate President Pete Kelly said Tuesday. “The Senate is motivated and committed to continue downward pressure on the budget.”
While closing the budget gap has been identified as a central focus of this session for the Senate, implementing a tax is still not an option.
“Most of those (tax issues) have been cleared off the table from our perspective. The governor wants to do a tax on jobs; the Senate has made itself pretty clear on that, we’re, at this point, not that interested,” Kelly said. “There is a plan that we’ve had floating out there for a long time, using our earnings from the permanent fund to fund government.”
Kelly noted that the idea of creating revenue for the state through a broad-based tax, whether income or sales, was thought up when oil was dwindling at $26 per barrel, a price that has now increased to nearly $70 per barrel.
“Frankly it’s hard to blame them for reacting the way they did,” Kelly said. “But I’m glad that the Senate held back and was a little more disciplined on that because we would now be pulling hundreds of millions of dollars out of an economy that’s trying to recover had we just said, ‘OK, let’s use taxes to fund government.’”
Kelly said the Senate Majority fundamentally disagrees with House Democrats that a tax is needed to create revenue for the state.
“There is nothing that has shown us at this point that a tax is needed and I don’t anticipate that will change,” Kelly said.
Kelly is not the only senator to feel this way. Majority leader and Soldotna Republican Sen. Peter Micciche said the state’s current fiscal struggle is only temporary.
“The Senate Majority a few years back talked about the fact that this is a temporary dip and we’re seeing some of those predictions come to fruition,” Micciche said Tuesday.
Micciche maintains that things are starting to look up for the state’s economy.
“Things are changing,” Micciche said. “We have seen the bottom and we’re starting to see an uptick in oil and gas employment and a lot of work on the North Slope this year.”
Micciche said he supports the Senate’s plan to use savings from the Permanent Fund to bankroll the government.
“We are talking about a plan that uses a proportion of those savings to get us through the dip,” Micciche said.
Both Kelly and Micciche said they feel staying the course will bring the state through its current fiscal struggles.
“The Senate isn’t just going to wait around for (oil) prices to save us. We know that there are fiscal challenges and we have to respond to them, and we will, we have a plan,” Kelly said. “We’re sticking with the same plan that we have. But clearly taxes are inappropriate at this time. We have to let the bleeding stop in this economy and we have to let it heal up a little bit before there are any discussions of new taxes on working Alaskans.”