by Kelley Lane for Seward City News-
Last Friday, Senator Peter Micciche paid a surprise visit to the Seward Chamber of Commerce Luncheon, which is held bi-monthly at the Breeze Inn. Micciche has served as the Kenai Peninsula’s state senator since 2013 and the Senate majority leader since January of this year. He lives in Soldotna. Alaska has a uniquely small state senate, with just twenty senators that each represent approximately 35,000 constituents. Many areas have just one senator, although the district of Anchorage is represented by seven.
According to Senator Micciche, he was in Seward to attend the Alaska Superintendents Association Fall Meeting. On the night before the luncheon, Micciche made a call to Cindy Clock, Executive Director of Seward’s Chamber of Commerce, and offered to be the luncheon speaker. She heartily agreed. Micciche’s presentation was aimed at explaining our state’s budget and economy. Micciche presented an optimistic outlook on where Alaska stands with regards to our current budget deficit.
Micciche’s presentation highlighted the fact that “the risk in our single commodity economy is not new.” Alaska has long been a boom & bust economy, due to the various industries that have been booms over the course of recent history: furs, gold, fish, oil & now, tourism. This year, Alaska received over 2 million visitors, according to the Alaska Travel Industry Association. Micciche sees this as a positive, but moved along to talk about the reality that tourism does not net the same kind of state income that petroleum did previously.
Micciche described himself as someone who believes in not overcapitalizing government. He explained that he uses a similar approach to his life, his personal businesses and how he serves in the senate. “We have a population of 735,000 people. We can’t afford a 13 billion dollar budget,” said Micciche. “We spent a lot of money on things we shouldn’t have when the billions were flowing.”
Micciche cited a budget plan that would use a portion of the State’s earnings reserve and the constitutional budget reserve (CBR) to cover part of the state’s deficit. The deficit was $4B in 2015, but rising oil prices reduced it to $2.3B by 2016, which is where it sits today.
He emphasized that this plan would “only use a portion of the savings because less is being used to fund government than is being earned over the long term.” According to Micciche, this plan would allow the fund to continue to grow, such that the deficit would reduce over the next 4-5 years, and become nonexistent within a decade if budget restraint is maintained. He stated that the fund has grown at an average of 7% and this year earned 12%. Micciche cited a previous survey of Alaskans taken with regards to how they would like the budget deficit to be addressed. The results of this survey showed that instituting an income tax was the least favorite option and using the earnings reserve and capping the permanent fund dividend (PFD) was the most favorite.
Micciche briefly touched on another proposal to address the state budget deficit. The employment tax bill proposed by Governor Walker would tax income from employment at a rate of 1.5%, within the framework of the dividend amount. The cap would be two times that year’s dividend amount, which this year would be $2200 for incomes at or above $85,000. Micciche stated that he will review the bill, but is unlikely to support this solution.
Bryan Zak, Mayor of Homer, was in attendance at Friday’s meeting and asked a question about the potential of a liquified natural gas line flowing through the Kenai Peninsula. Micciche responded that “the numbers are tough… even though it would be good for the Kenai.” He referenced the Kenai Liquified Natural Gas (LNG) plant that began operations in 1969 and by 1972 “was fully depreciated.” Even so, the Kenai LNG plant is not operating due to low global prices. Micciche feels that if a debt-free facility can’t make it in this market, a facility that requires more investment would certainly struggle. In comparison, Micciche stated a big LNG producer such a Qatar “can up their production by 30% with relatively little investment.”
A question was raised about getting the education budget passed in a timely manner, particularly referencing last year’s legislative delay in giving school districts a budget with which to work. This resulted in educators and support staff going into their summer breaks while not knowing whether they would have a job in the fall. “We lost a lot of talent last year,” said Micciche. “Other states were having teacher shortages and we lost people.” Micciche stated that the education budget in Alaska has always increased on an annual basis and hopes that this year school funding won’t be used as a bargaining tool.