Speaking to the Haines Chamber of Commerce Feb. 15, state House Rep. Jonathan Kreiss-Tomkins, D-Sitka, painted a dire picture of Alaska’s finances in the coming decades.
“We’re running out of money, basically,” Kreiss-Tomkins said. “The good news is we have a lot of money in the bank so nobody is really going to be hurting this year. We don’t have to balance the budget because we can draw on our rainy day account, which I am in particular not very fond of doing, but it’s what we’re going to do for the foreseeable future.”
Unfortunately that $18 billion “rainy day” account will be gone by the early 2020s if the state continues on its current spending path, Kreiss-Tomkins said. That means Alaska residents and legislators need to start considering some “unsavory options,” like implementing a sales tax or income tax, converting the permanent fund into an account that supports government functions, cutting the budget by billions of dollars or establishing a natural gas pipeline, he said.
“Some combination of those things is going to have to happen for the state to remain solvent in the next decade,” Kreiss-Tomkins said.
Gov. Sean Parnell’s proposed fiscal year 2015 budget would require using $1.1 billion in savings to balance.
Funding added to the budget by the Alaska Legislature for statewide capital projects is also rapidly decreasing: in 2011, the legislature added $2 billion for capital projects. In 2012, it added $1.1 billion, and last year it added $400 million. This year the legislature will probably add about $300 million, Kreiss-Tomkins said.
“That’s just going to keep going; it’s going to become less and less,” he said. “And on the operating side, funds are going to be harder to come by for Fish and Game, for schools, for every entity, every department of the state that receives state funds.”
Parnell’s capital budget includes only one Haines project: $20 million for Lutak Dock modifications to accommodate the Alaska Class ferries.
Kreiss-Tomkins also told Haines School superintendent Michael Byer that the legislature likely won’t fund the school’s four major maintenance requests this year.
Much of the meeting discussion concerned the possible repeal of Senate Bill 21, which the legislature passed last session. The bill grants tax breaks to oil companies in hopes of stimulating investment in production and exploration.
Kreiss-Tomkins said he will support the referendum and vote to repeal the law. “We just forfeited a tremendous sum of money – $4.5 billion give or take a couple billion – over the near term for investment and production that’s simply not going to materialize in a meaningful way,” he said.
Chamber president Barbara Mulford asked about the status of Senate Joint Resolution 9, which would alter the Alaska Constitution to allow public money to go toward private or religious schools.
Kreiss-Tomkins said discussion about the amendment is very much alive, though he doesn’t believe the votes are present right now to pass the amendment. (Constitutional amendments require a super-majority, or two-thirds vote). If passed, the amendment would go to the voters for approval.
Kreiss-Tomkins said he opposes the amendment for “philosophical and practical reasons.”
Regarding the Juneau Access Road, Kreiss-Tomkins said a friend of his at the Department of Transportation recently told him the project’s quoted $520 million price tag is extremely low-balled.
Continuing to throw large sums of money at “mega projects” every year is a bad idea, Kreiss-Tomkins said. “We don’t have the money to follow through on these projects, and it seems completely fiscally irresponsible to me to do that.”
Parnell has penciled in $35 million for the Juneau Road project this year.
Kreiss-Tomkins will not represent Haines in the next session due to redistricting.