The Old Familiar Refrain

By Rep. Terry Martin

I hear the echoes of a distant chorus, singing a song of ten years ago. It’s 1987. It’s the Cowper administration, projecting a budget deficit of a half a billion dollars far into the future--the future that is today. Although the song didn’t make the top 40, and indeed was not even recorded for posterity, its major theme was...the Gap. The Gap. The Gap. The gappity, gappity, gappity gap gap GAP. Hi, ho Silver!

The sour notes they sang back then are the same ones being warbled by the Knowles administration today. The chorus today promotes the same solutions to the perceived budget gap as were pushed on us back then--the income tax, and the use of the earnings reserve account from the Permanent Fund. Cowper and his minions gave us their 5-year plan to save the budget (a Plan! a Plan! My kingdom for a Plan!)

The attached formula for covering the expected gap shows that the five-year plan then envisioned was way off in projecting future revenues. It would have set into statute solutions that were as unnecessary then as they are now.

Since that time, under Governor Hickel’s administration, we saw a major--and highly successful--effort in settling the back tax cases with the oil producers. This effort brought in nearly $4 billion, most of which was placed in the voter-approved constitutional budget reserve fund (CBR). The earnings from this account can be used to meet annual state operation expenses.

And what of the so-called fiscal gap? Is it really there? Or is it merely a construction of the big government spenders--a scary apparition conjured up by vested interests? The oil companies have no reason to allow a gap of any kind in their production--they will keep the pipeline full far into the future. Oil prices should stay relatively high, and revenues with them.

So why, we must ask ourselves, does the chorus continue to sing the same old tune that more revenues are needed through income taxes (they have dropped the verse about using the earnings reserve account because the CBR replaced it).

Since the voters elected a majority Republican legislature, the latter verse was changed from spending to saving. And this hallelujah chorus has been so inspiring that we deposited more than $1.8 billion back into the corpus of the Permanent Fund last year. We should continue singing this very popular theme by depositing another $500 million this year.

The new conservative chorus of the 20th Alaska Legislature can and should let action be its message. We should avoid the disharmonious jibber jabber of seeking new and higher taxes. This discord offers a false sense of security to bureaucrats and their interest groups to prop up a bloated budget. But it takes away the earnings of Joe and Mary Muldoon, average Alaskans.

Five-year plans are meaningless, when you consider that each legislature is completely independent of the commitments of the previous legislatures on revenues and appropriations, as well as everything else that isn’t nailed down in the constitution.

Would the “Gap Chorus” become silent if the current legislature were to present a meaningless, baseless 5-year plan? Would it not be a better service to the public--as the last five years have proven--to continue to strive to stop waste in government, and encourage the private market, including the oil and gas industry, to harvest and mine more of our natural resources.

We in the legislature should adjust our budget as actual revenues come into the treasury, either higher or lower than what was projected. Often, as in the current fiscal year, we may not even need to use the CBR, our rainy day account.

Despite the “Gap Chorus’s” shrill rendition of “the sky is falling, the slope is steep, the cliff is here, the crisis is deep, so open your wallets and while you sleep--we’ll make a soft landing,” we’ve seen in the last fiscal year an excess of revenues. We can best serve the Alaska public by prudently and deliberately, year-by-year, adjusting the annual budget, instead of trying to fit it into an ill-conceived five-year-plan.

We can best serve the public by avoiding quick fixes that rely on the addictive habit of spending the personal income of hard-working Alaskans. I for one love hearing the chorus that sings, “Blessed Is Alaska, With No Income Tax.” It has a good, wholesome melody that anybody can sing. And it really makes me feel warm and secure.