Begich's brother responds to pandering charge. This needs discussion.

State Sen. Tom Begich, brother of former Sen. Mark Begich, responded on Facebook to my post complaining about the failure of gubernatorial candidates Begich and Republican Mike Dunleavy to offer a sensible fiscal plan.

I was glad to see it. What Alaska needs in  the campaign is a more informed discussion about the fiscal options facing the state, with the details that are never included in campaign ads or superficial news coverage.

Tom Begich: I feel compelled to respond to Dermot's piece. I have and respect his reporting, but in this instance he is wrong. While it is true that the Governor suggested a fiscal plan, it was a plan that in the end amounted to nothing but a form of POMV that had no true statutory authority and left the Permanent Fund open to misguided legislative appropriation.

It's a bill that the legislature can ignore at will and simply opens up the earnings to be drained. I voted against this plan on the floor of the Senate and, without some form of broad-base tax and a real commitment from the oil and gas industry to pay a fair tax, would do so again.

The plan my brother proposes ensures that use of the earnings would be for education, inflation proofing and dividends. This falls within the amounts approved by the Legislature, but ensures a specific use for those funds.

This ensures forward funding of education and certainty for school districts, and would guarantee that Alaskans would still have ownership of the fund through a guaranteed, sustainable - smaller than present - dividend.

This action alone forces us into a real discussion of how we reach a balanced budget. My brother isn't counting on higher oil prices to make it all work out, he's suggesting taking education off the political table permanently and dealing with the prospects of how we build a long-term sustainable future.

He's not basing it on a fictitious pipeline and a billion-dollar bond proposal to pay back the oil industry from the governor, or a ruinous proposal for drastic cuts and a dividend that can't be sustained by Dunleavy.

And for a moment let's discuss the dividend and the real impact it has on our economy: In rural Alaska where unemployment is highest, fiscal costs are highest and where that check can make the difference between a functioning economy and a faltering one, this administration has had the "courage" to take approximately $25 million per year from stranded economies like the Lower Kuskokwim.

The year the governor cut these funds, he left it in savings, he didn't "fill the gap" he just created greater hardship in areas that could ill afford it. He also opened the door to the easiest decision for those looking for an easy way out.

For those of us in better off parts of the state giving up a portion of our dividend is not so difficult, but those who are most effected by poverty it was a cruel cut. So, Dermot is wrong.

Pandering is claiming courage when it was an easy answer. Pandering is claiming you are fighting for a plan and then you settle for the easy way out. Finally, Pandering is complaining about a legislature that won't help you and then doing nothing to try and change that body. Count me out of Dermot's view, I'd rather fight for a future then wring my hands over the past.

My response to Sen. Tom Begich:

Tom, I am waiting for Mark to spell out what taxes he supports.  He has declined to do that. 
Instead he wants to talk about being more efficient, the same bogus tactic employed by Dunleavy. 
For Mark’s Permanent Fund plan to work, we need to see how the rest of government would be funded. 
The “plan” on his website, which would require a constitutional amendment, needs a great deal more work. 
About taxes, those that passed the House and died in the Senate would have been a step toward a balanced plan. 
The idea that the capital budgets of the future will be borrowed money is not a good approach.

As a summary of my thinking about this, I wrote Sen. Mark Begich on June 29:

The PFD is a relatively small part of overall state finances. There is nothing magic about the 50/50 split and it may be unwise to stick to it. It all depends on overall state needs.

The incessant focus on the PFD as the thing that drives policy is wrong, but it is what people want to hear, so it is what candidates talk about. I don’t agree with this approach.

I want to see an overall fiscal plan with taxes and cuts, if there are any to be made. I’m  dubious about the cuts because we don’t have much of a capital budget now and that has to change. We are neglecting maintenance statewide, neglecting the university and neglecting predictable future costs, such as pensions. We are also failing to prepare for volatility in oil prices.

We are setting ourselves up for greater dependence on the Permanent Fund. The percentage withdrawal can and will be adjusted for short-term needs.

Put the PFD in the constitution? Maybe. But only after there is a fiscal plan with taxes that provides a sustainable future for Alaska, recognizing that the PFD is not the only important part of state government.

Everyone likes to talk about reform, but that Is akin to the unidentified $1 billion that Dunleavy wanted to permanently cut from the state budget. Or the $750 million the Senate wanted to cut. 

These ideas are inoffensive and belong in fantasyland or political ads. They  are no substitute for an unpopular discussion about taxes, which is what Alaska needs.

Walker offered a balanced plan with taxes and a PFD cut. There is plenty  of room to argue about adjusting the levers, but the key was recognizing that something difficult and unpopular had to be done. 

The PFD cut is the only part the Senate accepted. The taxes have to follow. Or we can hope that OPEC will act to bail us out, an irresponsible approach.

Your reluctance to talk about an income tax or raising oil taxes or other taxes, while promising a bigger dividend, troubles me. Just like the GOP talk about a bigger dividend without identifying cuts.

In my view, saying  you are not wed to any specific tax is a way of ducking the problem.  

Had the Senate acted on Walker’s proposed taxes, we would be in a much more sustainable position. 

Every candidate for state office should be talking in detail about specific taxes, spending, unmet needs and cuts.

Former Sen. Mark Begich responded June 29:

First I have never said a higher dividend, my point was to get it off the table so people keep using it as a football.  I would ask you to look at the article I did in the Daily News months ago.  The dividend that i suggested was around $1600 at that time.  Lo and behold that's where the ended up.

I am not saying put a formula in the Constitution, but the concept of a divided.  This will renew the faith of the community to have a little more trust of Juneau. 

On reform, I did this many times when I was Mayor, so it is not talk I have actually done it, from the Police Dept, to IT, Libraries, Parks and Rec, healthcare costs and the museum to just to name a few of the departments. 

We were able to restructure the gov't and get better results for the money we spent. Not a fantasy land, reality.   This helped get the public on our side to deal with the revenue issues, which we did.  Went to tax cap,increased tobacco and hotel motel tax and the largest fee increase in the cities history,  We were able to do this once we renewed the faith of the public.  So far the folks in Juneau have done very little to increase the faith of the community in their efforts.   That is why they have no fiscal plan.

I am not wed to any specific tax proposal because I am open to see where we can get the votes to pass. I also recognize you will never get everyone to agree, but you have to see where there is some light so you can push the right piece to get it done.  This is where Gov Walker has failed, he has just put stuff on the table and hoped it worked.  My principles around a tax will be simple, everyone needs to participate and the lowest income need not to carry the burden, because they have already done their part by taking a disproportionate impact from the PFD cut.

There are many more elements to how to do this, but this gives you more texture around what I sent earlier and hopefully gives you some clarity on what I am thinking.

Dermot Cole10 Comments