Thread by @mattbuxton

Really interesting discussion in House Finance Committee right now about the state's financial future when governor is not offering any real direction other than to dip into savings and put things up to a vote of the people.

The admin summed up:

#akleg

Revenue Commissioner-appointee Mahoney acknowledges that the governor's long-range fiscal plan doesn't exactly pencil out when it requires new revenue but he opposes new revenue without a vote of the people. She says it'll require additional, continued spending out of savings.

House reps ask her if that's her recommendation, to keep spending the Alaska Permanent Fund without a solution.

Mahoney: That would not be my recommendation, but there would not be any other choice.

#akleg

There's more questions about taxes. Several reps are incredulous that the state's plan is really this thin.

Mahoney reiterates that as long as there's a recession and as long there's not a vote of the people, the governor "is not comfortable implementing a new tax now."

Rep. Carpenter brings the conservative take, asking what the state's doing to increase its non-oil industries and therefore revenue: "I don’t see any recommendations or asks for growing or providing the opportunity for growth in that area. We see gambling but that’s it."

Mahoney says well how about mining? Dunleavy likes resource development.

Carpenter asks what the Legislature can do about it.

Mahoney says it's about federal overreach.

Edgmon comments to say it sure looks like there's no plan before the Legislature and, in his estimation, looks like there's no plan in the administration, either.

He says gambling obviously isn't going to cut it, nor are cuts alone going to... cut it.

Edgmon says Alaska's been a one-trick pony (oil) for a long time but is finally a two-trick pony (oil and investment revenue from the Alaska Permanent Fund) and it seems to be intent on undermining its newfound trick.

Edgmon, exasperated: Have there been at least any conceptual conversations about new revenue?

Mahoney says they've looked at some internally but he's not at the point to implement them because we're in a recession.

Edgmon: So we have to wait until the elections in 2022 for the Dunleavy administration to take any action on this vexing issue?

Mahoney: Yep.

Edgmon: "We’re just not doing our job without looking at the entire picture at this point." He asks if the Department of Revenue would at least help evaluate some of the #akleg ideas on new revenue. Would you at least participate?

Mahoney: Absolutely.

Rep. Rasmussen says that, actually, gaming has been extremely profitable across the country with about ~$40B in local tax revenue. "There's definitely a major impact."

Which I think factors in casinos...

Rep. LeBon asks if the short-term benefits of a mega PFD outweighs the long-term health of the fund.

Mahoney says there's always tension between investors and the beneficiaries.

LeBon says in this case the beneficiaries and investors are essentially the same.

Thompson calls the whole thing a recipe for disaster: "Nobody would want to vote to tax themselves but at the same time those folks would want to have the largest dividend possible. … Now we’re in real trouble."

#akleg

Asked about the disaster situation, Mahoney: It’s a situation where we all need to educate Alaskans about our fiscal condition so they understand that large dividends with deficit spending puts us long term in a difficult situation.

Ortiz asks what'd happen if Congress passes additional stimulus. Would that change his mind on the size of the PFD?

Mahoney: If checks are in the neighborhood of $1,400 that’s something that could help minimize the draw.

#akleg

Wool: "What are we going to do to get out of the recession other than handing out checks of $2,000 to $3,000?"

Mahoney talks about the cruise ships and also how people are opting to save instead of spend. "We need to open up!"

(Alaska is already pretty much completely open, by the way)

Wool also notes that some Alaskans are doing just fine despite the pandemic. What's $2,000 going to do for people who're making loads already?

He says it's unbelievable that they want to wait for nearly two years.

Wool says he doesn't really appreciate Dunleavy's suggestion that everything has to wait until a vote of the people to decide what to do about the deficit. The Legislature is the policy makers, sent there by the people, and they shouldn't be waiting around for another 2 years.

That's it for the confirmation hearing (this has been a confirmation hearing, by the way)

The House Finance Committee is not playing around. They held an a.m. meeting, this afternoon meeting (Mahoney confirmation and bonding/credit/debt presentation) and will be holding a presentation on the state's cashflow to 7 p.m. tonight.

"Fun" fact: Alaska's credit rating has been downgraded 10 times already. State official says that they should expect an 11th (and more) if it doesn't take substantial steps to closing its structural deficit this session.

#akleg