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Dyson Offers Suggestions on Fiscal Gap Fix
Asks Fiscal Caucus to Consider Hammond's "Tripwire" Idea

(ANCHORAGE) - Rep. Fred Dyson told members of the Legislature's Fiscal Policy Caucus today that Alaskan Legislators would likely support new taxes or fewer state services if such measures were triggered only by a clear threshold tripwire, as suggested by former Gov. Jay Hammond.

"(Hammond) has wisely foreseen the difficulty of elected officials voting for any unpopular choices and staying in office," Dyson told 15 caucus members meeting at Anchorage's legislative offices. "A threshold will get the politicians off the hook, and perhaps encourage the fainthearted to act."

Establishing a direct link between declining natural resource revenue and higher taxes, using the Permanent Fund Earnings Reserve account, and/or state budget cuts would build support among citizens and government alike for new economic development, Dyson said. If taxes were required, he said, they should be matched with steps to cut government spending, including: capping state executive salaries and overhead costs, increasing special-interest user fees, privatizing some state services; and shortening legislative sessions.

"This will accomplish several things, including making State employees, and others who receive state money, enthusiastic supporters of most kinds of economic development in Alaska," he said. "It will also make it clear that state income either comes from state natural resources or from extraction from citizens' pockets. I believe actions on the spending side of the equation will both help balance the budget and also greatly broaden the support for the measures you may propose on Alaskans on the revenue side."

The Fiscal Policy Caucus is an informal, bipartisan group of legislators formed earlier this year to consider issues related to the state's revenue and spending picture. Though not a member, Dyson monitors the caucus' activities and supports state fiscal prudence in the face of uncertain state revenues.

Also at the meeting, members of the caucus heard Anchorage attorney Roger Cremo describe how the Legislature might convert Alaska's one-time revenue from natural resources into an endowment that could produce 5 percent earnings in perpetuity as one element in a long-range fiscal plan.

Members also reviewed results from a series of Town Hall meetings they held around the state this summer. They also shared suggestions on how to improve the outcome of meetings planned this fall, including making it easier for participants to understand the long-term consequences of fiscal policy decisions that the Legislature may consider in the upcoming session.

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• Memo to Fiscal Policy Caucus from Crouching Grouches Caucus., 09-24-01
  
• Print Friendly Version of Memo., 09-24-01
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Memo to Fiscal Policy Caucus

To: The Fiscal Policy Caucus
From: Rep. Dyson and the Crouching Grouches Caucus
Sub: The spending side of the equation

Dear Caucus Members;

I encourage you to give serious consideration to Jay Hammond's suggestion of a tripwire-type of threshold as you consider the future imposition of more taxes on Alaskans or the use of more Permanent Fund earnings to support Alaska government. Jay has wisely foreseen the difficulty of elected officials voting for any unpopular choices and staying in office. If you set a threshold that we might hit in the future, that will automatically swing into effect, it will get the politicians off the hook and perhaps encourage the faint-hearted to act.

I also encourage you to consider making the tripwire threshold a minimum level of the Constitutional Budget Reserve. This will accomplish several things, including making State employees and those who receive State money enthusiastic supporters of most kinds of economic development in Alaska. It will also make it clear that we can get income for State government from the natural resource extraction or from the people's pocket. We may have to do both, but for me the best choice is the expansion of our economy.

Finally, I recommend that when you finally plan to impose financial costs on Alaskan individuals that you concurrently force State government to pay a price as well. The following are some suggestions for your consideration:

• Lower State executive salaries. Say they lose 50 percent of everything over $55,000 per year or so
• Set some targets for reduction of department overheads, travel, and for jettisoning of marginal activities
• Set goals for the minimizing or elimination of State activities that are not constitutionally mandated and/or a core role of government
• Set guidelines for the increase of user fees for State services that do not clearly benefit Alaskans generally
• Implement appropriate recommendations from the Privatization Task Force
• Lower qualifying thresholds for people receiving various kinds of state largess. Currently some of these thresholds are at 200 percent of the federal poverty level; drop them to 175 percent or 150 percent
• Reduce the cost of the Legislature's operations by eliminating overhead costs. A two-year budget cycle and a shorter session in non-budget years could help reduce costs

I believe actions on the spending side of the equation will both help balance the budget, but also greatly broaden the support for the measures you may propose on Alaskans on the revenue side.

Respectfully submitted by
S/s Fred Dyson
Rep. Dyson - interim chair of the Crouching Grouches Caucus

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