Alaska House members express concern about lack of plans to close long-term budget gap

Alaska House Finance Committee members meet with Alaska Permanent Fund Corp. CEO Angela Rodell in the Capitol in Juneau, Feb. 23, 2021. (Photo by Andrew Kitchenman/KTOO and Alaska Public Media)
Alaska House Finance Committee members meet with Alaska Permanent Fund Corp. CEO Angela Rodell in the Capitol on Feb. 23. On Tuesday, committee members raised concerns about the lack of a plan to balance the state budget in the long term with Revenue Commissioner Lucinda Mahoney during her confirmation hearing. (Photo by Andrew Kitchenman/KTOO and Alaska Public Media)

House members expressed concern that Gov. Mike Dunleavy has not proposed plans to balance the state’s budget in the long run. 

Alaska Department of Revenue Commissioner Lucinda Mahoney (Department of Revenue photo)

Members of the House Finance Committee raised these concerns with Revenue Commissioner Lucinda Mahoney during her confirmation hearing on Tuesday.

Dillingham independent Rep. Bryce Edgmon said he’s uneasy about spending from Alaska Permanent Fund’s earnings beyond what’s planned

“I think you sit as the revenue commissioner in a very untenable position, given the fact that there is no plan before the Legislature and, in my estimation, I don’t think there’s a plan in the administration to bridge the fiscal gap,” he said.

Dunleavy has proposed spending more than $3.2 billion beyond what was planned from permanent fund earnings. This money would pay for state services, permanent fund dividends based on the formula in a 1982 state law, and an additional dividend payment beyond what was paid last year. 

The governor has said any new broad-based tax or change to the formula to set PFDs must go to a vote of the people. Committee members told Mahoney that that will take too much time. 

She said the state would draw more from permanent fund earnings until spending and revenue were in balance. 

“I recognize that the timeline doesn’t work,” she said. “However, the governor is not supportive of any new tax without the vote of the people. ”

The Legislature’s nonpartisan budget experts have said that without changes, the state government could spend down the roughly $15 billion earnings reserve in the same way it reduced the state’s other savings accounts from more than $16 billion in 2013 to less than $1 billion today. 

Fairbanks Republican Rep. Steve Thompson said he expects voters would reject both new taxes and lower dividends. 

Thompson asked Mahoney: “If we have no taxes for revenue and more money coming out to pay a larger dividend, does that sound like a disaster?” 

She replied: “I think it sounds like it’s a situation where we all need to educate Alaskans in regard to our fiscal condition.”

Mahoney noted that the Department of Revenue estimated last year how much different taxes would raise. 

The Legislature plans to hold a joint session to vote on whether to confirm Mahoney and the governor’s other appointees later in the legislative session. 

 

Andrew Kitchenman

State Government Reporter, Alaska Public Media & KTOO

State government plays an outsized role in the life of Alaskans. As the state continues to go through the painful process of deciding what its priorities are, I bring Alaskans to the scene of a government in transition.

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