Kelly: Taxes not on the table this year

One of the leaders of the powerful Senate Finance Committee has said taxes are not on the table this year as the Legislature considers how to balance a $3.7 billion deficit.

Speaking at a press conference Tuesday morning, Sen. Pete Kelly, R-Fairbanks, said he isn’t interested in taxes as a solution.

“I’m one vote, but I’m not getting into the tax business while I know government is too big,” he said.

The Senate on Monday passed an $8.73 billion operations budget that cuts $571 million from the current fiscal year. The Senate’s budget is effectively a draft, however, as the House is not expected to concur with the Senate’s changes. The House’s disapproval would mean the Senate and House versions of the budget will go to a conference committee for a discussion on a compromise proposal that combines both drafts.

“It needs to be smaller before we can ever get into a conversation with Alaskans (about taxes),” Kelly said.

Gov. Bill Walker has proposed a wide-ranging plan that includes taxes, spending some of the earnings of the Alaska Permanent Fund, and budget cuts to erase the deficit by 2018. None of Walker’s tax proposals have yet reached the Senate Finance Committee, and none of the three proposals for spending Permanent Fund earnings have reached the committee yet, either. Wednesday was the 58th of 90 days in the legislative session.

Last year, he said, the Legislature cut hundreds of millions of dollars from the budget.

“They said the sky was going to fall, and essentially nothing happened. Government continued to function. That tells me (the budget) was at least that fat,” Kelly said. “We’re going to do it again.”

While Kelly spoke only for himself, his fellow Finance Committee members seemed to indicate a willingness to use the state’s $8.2 billion Constitutional Budget Reserve, instead of new revenue, to balance the budget.

“You don’t have to fill the entire gap,” said Sen. Peter Micciche, R-Soldotna. “I think that’s where the governor and us are in some disagreement.”

He said it make sense to spend from savings because Alaska is in a position akin to that of parents who have saved for their child’s college education. “Our child just graduated from high school, and it’s time to start thinking about how we’re going to pay for college,” he said.

Sen. Lyman Hoffman, D-Bethel and a member of the Senate Majority on the finance committee, said he expects the Legislature to use savings, but that’s not necessarily a permanent thing.

“We are going to be using savings accounts, but as was with the budget when people said everything was on the table, I believe that everything on the revenue side has to be on the table too,” he said.

In regard to permanently filling the deficit, he said: “It’s not going to happen in one year, but I’m hopeful that we will make some strides. The focus of the next 30 days is to look at all options.”

• Contact reporter James Brooks at james.k.brooks@juneauempire.com.

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