Budget deficit needs attention now
Alaska’s path to financial stability will be neither short nor easy, and local residents will have the chance to weigh in on the issue before the state forms its final plan of action.
Randall Hoffbeck, commissioner of the Alaska Department of Revenue, addressed area residents in a presentation called “A Sustainable Future for Alaska” during a combined Kenai and Soldotna chambers of commerce luncheon Tuesday afternoon.
The meeting was both an informational session on Alaska’s projected $3.1 billion budget deficit for 2016 as well as an invitation for residents to offer their own suggestions to the state before it formulates a policy decision this year.
Hoffbeck, who had been pursuing a career change from administration and appraisal to the ministry before being appointed in December 2014, led the luncheon in prayer before launching into Alaska’s fiscal problems and their potential solutions. He gave a similar presentation in Fairbanks in June, and said that before Alaska residents can offer suggestions to the state, they need to accept that action needs to be taken, soon.
“We soon realized that the bigger issue was convincing people that we actually have a problem,” Hoffbeck said of the Fairbanks meeting. “That’s what these meetings really focus on.”
Hoffbeck introduced four areas state officials will most realistically look at to balance the state’s budget: continuing with government budgetary restraints, initiating “taxes impacting individual Alaskans,” altering oil and gas taxes and credits, and “strategic” use of state assets.
Hoffbeck said the state presently has three years’ worth of savings to operate on. Ideally, though, officials wouldn’t have to touch the savings and would be able to count them as an asset to work with as part of the solution.
Hoffbeck said the state has roughly $100 billion in assets, and that deploying them “responsibly” and “aggressively” could help make a dent in the deficit.
Hoffbeck said it is not realistic to rely on oil to bail Alaska out of its financial problems; the price of a barrel of oil is simply too low.
“Marijuana is not going to balance the budget either,” Hoffbeck said.
The future taxation of marijuana in Alaska is projected to generate between $5.1 million and $9.2 million in the first year of commercial sales, according to estimates made by the Department of Revenue. Hoffbeck said this is not likely to make a significant dent in the deficit.
During the question section of the presentation, Kenai City Manager Rick Koch asked whether state lawmakers are confident they can formulate a cohesive plan to address the budget deficit in a timely manner. Hoffbeck said the state needs to make policy decisions this year. He said the consequence for failing to do so is that tax initiatives or other proposals wouldn’t get off the ground in time to help.
“There’s no plan in place today. We’re actually asking people to take a look at the issue, give us suggestions,” Hoffbeck said. “The governor would like to put together a … plan by late August or early September.”
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