Pare down, don’t panic — Sen. Micciche advocates budget belt tightening

Photo by Jenny Neyman, Redoubt Reporter. District O Sen. Peter Micciche gives a legislative update to a packed house of constituents at the George A. Navarre Borough Building in Soldotna on Friday.

Photo by Jenny Neyman, Redoubt Reporter. District O Sen. Peter Micciche gives a legislative update to a packed house of constituents at the George A. Navarre Borough Building in Soldotna on Friday.

By Jenny Neyman

Redoubt Reporter

Sen. Peter Micciche’s message regarding the state budget was one of glass-half-full optimism. The state’s financial cup won’t be running over anytime soon, he told constituents at a town hall meeting in Soldotna on Friday, but as long as cuts are made and spending is reduced, it won’t be running empty, either.

“We’re in pretty good shape. The efforts that we’re making now are to make sure that we stay in good shape,” he said.

The District O senator, who won re-election in November, reminded the packed crowd in the assembly chambers at the George A. Navarre Borough Building that the state has seen worse financial times, but that the current situation needs to be addressed head on.

“Back in ’81, we were much higher than we are right now (in spending). The reality of it is we had no savings and we were in a lot more challenging position than we are today. We’re going to be OK. We have a bright future and plenty to celebrate,” Micciche said.

The state has about $70 billion in the bank, Micciche said, plus predictions of future petroleum revenues. But with oil prices currently down around $50 a barrel, the fiscal year 2014 projections estimate a $3.4 billion shortfall in the state budget, with another $3.5 billion deficit expected for fiscal year 2015.

“The fact is we’re overspending right now. We need some trimming and we can all pull it into line once that occurs,” he said.

Micciche outlined his financial priorities, including setting sustainable operating and capital budgets and a forward operating plan, working to bring North Slope natural gas to terminus in Nikiski, establishing a statewide energy plan, focusing on essential services the state is constitutionally mandated to provide, and reining in capital spending.

“Unless it’s something that comes with a federal match or federal funding where we need our capital in as the match, it’s going to be a year without capital,” he said. “… And then, making difficult choices — I need to hear from all of you on a regular basis about what’s important to you. What’s important to you is what’s important to me. It’s not about Peter, it’s about all of you.”

Several people spoke up at the meeting about programs and projects they wanted spared or funded — including reinstating money from snowmachine registration fees that goes to trail grooming organizations — including the Caribou Hills Cabin Hoppers, sparing the Youth Court program, maintaining Alaska State Trooper staffing levels and providing fire suppression at the Ninilchik harbor.

Micciche cautioned that if budgetary belt-tightening isn’t enough to close the fiscal gap, then increasing revenue might be necessary. Utilizing Alaska Permanent Fund earnings, for instance, should be discussed.

“If the price of oil stays low and you all demand services above what we can afford, that’s one of the things you’re going to have to think about,” he said.

To Micciche, instituting state income, sales or property taxes is less palatable.

“I will do all that I can in my power to not tax Alaskans,” he said. “I think it would put us in an economic tailspin. It’s challenging to live up here. Our environment is challenging alone. It’s expensive, it’s cold, energy is expensive, and taxing Alaskans is not on my slate of activities.”

Micciche was an engineer of the controversial Senate Bill 21, which changed the way the state taxes the oil and gas industry in 2013, and survived a voter initiative to repeal it this fall.

Micciche defended the tax structure of SB21, saying that the state would be in even worse financial shape under the previous system, Alaska’s Clear and Equitable Share.

“We would have been $224 million in the hole with ACES, we’re $605 million to the good with SB21, it’s a $400 million difference — $500 million is half a billion. Pretty significant change, the reason for that is the binding gross minimum and the elimination of some capital credits,” he said.

The binding gross minimum was Micciche’s amendment to the bill.

“If you remember why we made a big deal about a 35 percent base tax, it’s the highest base tax for oil since statehood. And in a low-price environment, it is literally what made $400 million difference,” he said.

The issue of tax credits was raised by a questioner. Micciche said that many were “slashed” in SB 21, but that more might need to be addressed.

“We knew we’d have to go further some day. It seems to be working, but we need to look at them,” he said. “… In SB21 we tried to craft a per-barrel tax that you have to make oil to get the credit. That goal needs to go further.”

He said that all state tax credits — to the oil and gas industry, the film industry and for fisheries products — should be on the table.

“Anytime I pass or support a tax credit it’s for a specific reason, and if people don’t live up to the reasons we designed those credits then we should start cutting them back,” Micciche said. “If we get to a point of austerity where we can’t deliver the basic state essential services, everything’s on the table. We need to look at every one of them and determine, does it have more value in jobs and production, or does it have more value in education, law enforcement and those other areas?”

Micciche hit on several topics during his half-hour presentation — and the over two hours of questions that followed — including a process to establish minimum in-stream flow levels in salmon streams that must be maintained in development projects, and the possible expansion of Medicaid coverage in Alaska. His answer there is maybe, if the program is reformed to cut costs first.

“Medicaid reform is imperative. … Can providers deliver substantial savings through reform? Can they cut the waste? And if so, we can afford to expand. That’s where you get the real benefit out of expansion. If you just expand today, we’re not going to see any benefit, we’re not going to see any savings,” he said.

Smoking regulations — both tobacco and marijuana — were the other hot topics of the evening. Micciche was questioned about Senate Bill 1, which he is sponsoring, which bans smoking in workplaces statewide in order to limit secondhand smoke exposure.

“Your right to smoke stops where you force others to smoke, as well, that choose not to,” he said.

Marijuana talk ran the gamut, from the details of what, where and how much is now legal for personal consumption, to what rights business owners have to disallow pot use among employees, and the interplay between state and federal laws that are now at odds over pot.

Next up, the Legislature will work on regulations governing the commercial aspect of marijuana. Micciche said he did not support the voter initiative that legalized pot, but will honor voters’ wishes, even though, he hopes those wishes change.

“We’re going to honor what the voters intended. We’ll see if they agree with that in the next couple of years. It will stand for two years without any changes in the Legislature unless someone else does an initiative that says, ‘You know, we thought about this, we think marijuana should be legal. We don’t like the commercial part of it, we want to change that a little bit.’ That’s something you all have the power to do,” he said.

On these issues, and any others, Micciche invited constituents to keep in touch with his office.

“If I have not demonstrated that I work for you and listen to your concerns, you need to let me know that,” he said. “That’s the most important part of my job. Actually, it’s the only important part of my job. So, if I’m not hearing from you, I can’t know how you feel about (the issues). … Whatever we can do to make sure that you’re being heard and that we’re carrying your message forward.”

Micciche’s office can be reached by phone at 465-2828, or email at senator.peter.micciche@akleg.gov.

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Filed under budget, economics, Legislature

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