With legislators and their staff packing their bags and heading to Juneau this weekend, Rep. Paul Seaton, R-Homer, and Sen. Gary Stevens, R-Kodiak, expect a challenging second regular session of the 29th Alaska Legislature.
The session opens next Tuesday at the Alaska Capitol in Juneau. While Seaton and Stevens have filed bills on things like Medicaid reform and electronic cigarettes, both said the biggest issue is the budget. With the price of oil dropping through the floor, Alaska faces an almost $4 billion deficit between revenues and a budget similar to last year.
“It’s going to be one of the toughest years I’ve faced in 16 years to figure out this budget,” Stevens said. “I think the governor has given some valuable leadership.”
Stevens referred to a plan by Gov. Bill Walker to balance the budget through a combination of more cuts, use of Alaska Permanent Fund earnings, an income tax and other taxes.
The city of Homer won’t be paying for its annual delegation of city officials to visit Juneau in mid-session. With members David Lewis, Donna Aderhold and Bryan Zak voting yes and Heath Smith and Gus VanDyke voting not, at its regular meeting on Monday and on a 3-2 vote, the Homer City Council
failed to approve travel authorization at about $1,250 each for Mayor Beth Wythe and council members David Lewis and Catriona Reynolds. An amendment to only pay for Wythe’s travel also failed. An action needs at least four votes to pass.
Smith pulled the authorization from the consent agenda. He said the city’s paid lobbyist was sufficient to represent Homer.
“I guess I have a little heartburn … to the fact that we spent $40,000 to send someone to Juneau on our behalf and we now want to send four more people to Juneau,” Smith said.
City Manager Katie Koester will also visit Juneau, but her travel is paid for out of the city manager’s budget and doesn’t require council authorization. Wythe later said she would pay for her trip herself.
One issue the city might want to lobby against is a proposal by some legislators to raise revenues through a statewide sales tax. Senate President Kevin Meyer, R-Anchorage, has proposed such a tax. Seaton said Meyer’s idea resurrects a 2003 proposal by former Gov. Frank Murkowski of a 3-percent state sales tax that would have no purchase cap. It also would set a cap for what cities and boroughs could tax. Seaton criticized that idea, particularly when the state is cutting revenue sharing to cities.
“At the same time we’re implementing something that, by the way, we’re going to do away with a way to raise money locally,” Seaton said.
Stevens also was critical of a state sales tax.
“It’s easier for a legislator from Anchorage to propose a sales tax,” he said. “They don’t have one.”
Seaton instead supports an income tax. Last year he filed a bill similar to Walker’s plan for an income tax, though Seaton’s tax is higher. Seaton says his idea has the same administrative cost as Walker’s, but raises three times as much, $600 million to $200 million. Both plans would base the tax on a percentage of what a taxpayer pays in federal income taxes — line 163 on a tax return.
An income tax would be less regressive, that is, impose less of a burden on low-income taxpayers. It also would tax higher-earning taxpayers more as well as tax out-of-state residents working in Alaska. Seaton’s bill would tax capital gains at the same rate as labor.
“My personal preference is you’re trying to get balance in the system so everybody is sacrificing some. You don’t want to be hitting one segment of the population more,” Seaton said.
Finding that balance in new taxes will be part of the Legislature’s challenge.
“I think what you’re going to see is some long and convoluted discussions on how we add revenue to the state,” Stevens said. “As important as it is, I don’t think the Legislature is going to be able to make any decision on enhancements this year.”
Seaton said that rather than pass budget fixes piecemeal, the Legislature should take a wider approach. He also pointed out that some options, like an income tax, won’t start earning money until there’s been a year to collect taxes on income. The state hasn’t about two years of funding in its savings account to supplement the state budget.
“If you do something comprehensive, you’re still going to take the same kinds of objections, but if this balances and solves the problem, then at least you can tell people, Hey, it’s tough, we really didn’t like doing this, but it solves the problem,” he said.
In other bills, Seaton has prefiled a bill to reform Medicaid. It’s the undecided part of an attempt last year to consider Medicaid expansion. The Legislature proposed expansion based on reform, but Walker unilaterally implemented Medicaid expansion so as to receive federal funding for Alaskans who don’t qualify for health insurance subsidies under the Affordable Care Act.
Seaton’s bill would reform Medicaid by allowing waivers for some requirements of Medicaid — allowing alternate ways of providing health care that could be less expensive. The bill also would allow for demonstration projects like the global payment model, where services are paid for by the patient and not the incident.
“The idea is that you are efficient, and the best thing is you keep people healthy and it’s cheaper,” Seaton said.
Stevens has several bills still in the system he filed in the first session. One would encourage better teaching of civics at the secondary level. Another bill would apply the same rules for selling tobacco to electronic cigarettes.
Stevens also is working on a bill to establish a program for building museums around the state — when the state has money to do so. That also would apply to existing museums like the Pratt Museum that seek to expand.
“And the Pratt would be at the head of the list,” Stevens said.
For information on keeping in contact with Seaton and Stevens, see the box on this page .
Michael Armstrong can be reached at email@example.com.
Rep. Paul Seaton, House District 31
235-2921 (connects to Juneau during session)
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Sen. Gary Stevens, Senate District P
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