Economics, KPB, Moose Pass News, Politics

Groups Ask State for Money: Senator Highlights Fiscal Gap

State Senator Pet Micchiche discusses his priorities at Seward Town Hall March 8, 2015. Heidi Zemach photo
File photo – State Senator Peter Micciche discusses his priorities at Seward Town Hall March 8, 2015. Heidi Zemach photo

By Rick Smeriglio for SCN — The State of Alaska currently spends $2.7 billion more than it takes into its unrestricted general accounts. Nonetheless, the unincorporated community of Moose Pass and the Seward/Bear Creek Flood Service Area have requested funds from the State for capital improvements. Statewide, many others have as well.

At a meeting in Moose Pass last Saturday, residents requested a State Capital Improvement grant of $561,500 for a new fire engine and $60,000 to study the redevelopment of a small reservoir in town to supply water for fire suppression and to generate electricity. The Kenai Peninsula Borough processes the State grants. State Senator Peter A. Micciche – District O (includes Moose Pass) – attended the meeting. KPB Assembly member Sue McClure also attended.

Senator Micciche expressed no opinion about the likelihood of the State’s granting the request. He did say that life and safety projects had the greatest likelihood of funding. Senator Micciche told meeting attendees that the Alaska Energy Authority also funded renewable energy projects.

Last Monday, September 21, S/BCFSA Board voted to request $4 million for flood mitigation work on Box Canyon near Seward, as a State Capital Improvement project. After consideration of several alternatives, the board also voted to request $250,000 for removal of stream-deposited gravel that accumulates on the upstream side of three State highway bridges over Salmon Creek. The gravel removal project contemplates additional removal in future years. From its own funds already in hand, the board also voted to give $5,000 to the Lowell Point community for flood mitigation work along Spruce Creek.

This potential spending for a few local projects seems minuscule compared to the $2.7 billion gap reported by state government. The accumulated spending statewide however, has caused concern.

Senator Micciche said, “We’ve cut budgets for four years in a row. We just don’t have runaway spending. That doesn’t mean there isn’t room to cut, but that exercise started four years ago.”

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As part of the State’s revenue sharing program, unincorporated communities such as Moose Pass and Lowell Point receive funds yearly. KPB administers the program which amounts to $18,922 for each community for fiscal year 2016. KPB website suggests that Moose Pass could receive three times that amount because of its layout into three units. KPB recognizes 17 unincorporated communities on the peninsula in addition to incorporated cities.

For 2016, Moose Pass has requested $4,000 for its Chamber of Commerce for equipment to promote winter activities and to place an advertisement in the Upper Kenai Visitor’s Guide. The remainder of the shared revenue will help fund operations of the Moose Pass Volunteer Fire Company.

After the meeting to request State funds, Senator Micciche shared a printed version of a presentation entitled Building a Sustainable Future produced by the Governor‘s Office. He shared information about where State revenues come from and where they go. Earnings from investments of the Permanent Fund constitute the single largest source of state revenue, some of which pays for dividends and some of which pays for government. The State reinvests some earnings back into the Fund. The federal government funds about 27 percent of state operations. Education constitutes the single largest category of state expenditures according to the presentation.

“Do I want to cut education?” asked Senator Micciche rhetorically, “No, I’ve got four kids in school,” he answered himself.

The Senator went on to outline various options as he saw them, to increase revenues to state coffers to close the $2.7 billion gap. Currently, funds to fill the gap came from the budget reserve, a sort of State savings account, which will soon run out. The options zeroed in on taxes and on income from the Permanent Fund. Taxes included taxing individuals and reducing tax credits to the oil and gas industry. Options did not include tapping the earnings stream that funds the yearly dividend from the Permanent Fund. This year’s dividend exceeds $2,000 for every individual. The Alaska Constitution does not allow state government to spend the principal or body of the fund, currently over $50 billion.

Senator Micciche said, “We are the victims of the low price of oil … The least impact revenue source to Alaskan families is the earnings of the Permanent Fund. Not the body of fund and not the fund earnings that pay for the dividend.”

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