Sometimes I just have to pause and listen to REO Speed Wagon’s “Roll with the Changes”. The catchy chorus is a great thing to keep in mind while considering all of the things that are currently in play and the impact that those changes could bring our way.
So, let’s roll!
- As mentioned above, the Governor has revised his call for a special session, it’s delayed by two weeks to Monday, August 16th, at 2:00 p.m. at the request of the Majority/Minority leadership of the Senate and House. The request was for the purpose of allowing more time for the bipartisan/bicameral Fiscal Policy Working Group to have hearings, engage the public, and come to a conclusion in the form of policy recommendations.
- The subject matter of the call is amended and is now inclusive of/limited to:
- Spending Cap: HJR 6 / SJR 5, or similar resolutions proposing amendments to the Constitution of the State of Alaska relating to an appropriation limit; and relating to the Constitutional Budget Reserve fund.
- Permanent Fund, PFD, and PCE: HJR 7 or SJR 6, proposing amendments to the Constitution of the State of Alaska relating to the Alaska Permanent Fund, appropriations from the Alaska Permanent Fund, the Alaska Permanent Fund Dividend, and power cost equalization.
- New Revenue Measures: An act or acts relating to measures to increase state revenues.
It’s important to note that the wording in the HJR 6 / SJR 5 line item allows the flexibility for “similar resolutions” to be considered, while the wording for the HJR 7 / SJR 6 line item is limited to those specific resolutions.
The item referring to “increase state revenues” allows a great deal of flexibility for all of the various forms of revenues including all forms of taxes, user fees, or anything else that might increase income to the state. I’m wondering if I could include a piece of legislation for a bake sale in this call?
I know, that’s silly. I’m just kidding! I’m just trying to point out that the last item provides a great range of possibilities.
There are other agenda items that also appear to be missing: appropriating the dividend, reverse sweep provisions, and voter approval of new revenue measures. We shall see if these are errors that get fixed, but for now, this is what is on the table.
So after public input and other deliberations are complete, we will get recommendations from the working group which will most likely include some form of consensus on the assumptions to use in the calculation of current and projected metrics. These assumptions include fund values/returns, other revenue, oil prices, spending, inflation, etc. This is important because all financial projections are based upon values that are constantly changing over time and that can be calculated in various ways. It’s important to clearly understand the accuracy and likelihood of various estimates and lock in the most accurate assumptions for everybody to use.
It will be much more difficult for the group to come to a consensus on all of the issues that are on the table including how to restructure the permanent fund and dividend calculation, more or less spending, and more taxes.
My personal hope is that we successfully pass a resolution for a meaningful appropriation limit and also agree to merge the Permanent Fund earnings and principal accounts into a single and more efficient fund from which an up to 5% POMV annual appropriation is made.
The other potential changes including the proposed 50/50 split and new revenue sources really need to be worked together if we are to avoid creating a funding gap. Additionally, my stated campaign position was that I did not agree with creating new taxes to sustain current spending and larger PFDs. I still believe that we need to have a serious discussion about driving greater efficiencies in government and doing more to liberate our private sector productive economy.
As always, I am interested in your thoughts, so please feel free to contact me if you have any questions.
