A Citizen’s Guide

Members of the Republican minority in the state Senate rolled out a proposal Wednesday to put some of the projected oil tax revenues into a state savings account.

The proposal involves the additional revenues brought in when oil prices are high and comes in response to criticisms that raising the state’s oil production tax will only increase government spending.

At a news conference, Senate Minority Leader Gene Therriault, R-North Pole, said people have contacted him and other minority members with concerns that additional revenues would simply be used to “inflate” government services.

Some, including the Alaska Support Industry Alliance, have used the criticism to oppose the tax increase in Gov. Sarah Palin’s tax proposal, Alaska’s Clear and Equitable Share.

Therriault in-stead stressed the importance of saving some of the additional money the state collects through the tax. At some point, state spending will exceed revenues and Alaska will end up with a fiscal gap, he said.

“Depending on what you think production and price levels will be, that gap could be closer or a little bit further, but is, we believe, in our future,” he said.

The minority’s proposal would recommend that the Legislature deposit into the Constitutional Budget Reserve half of the additional revenue brought in through the progressivity element of the production tax, which raises the tax rate when oil prices are high.

The Constitutional Budget Reserve was created in 1990 and has been used to balance the state’s budget in lean years. Depositing some of the tax revenues would help bring the fund’s balance back up, Therriault said.

The proposal, which minority members hope to add to Palin’s tax bill, is not binding because of a prohibition on forcing future lawmakers to make specific appropriations.

Even so, it’s likely to face some opposition.

Sen. Bert Stedman, a Republican from Sitka and co-chair of the Senate Finance Committee, which will review ACES, called the proposal “premature.”

He said Wednesday that he and fellow co-chair Sen. Lyman Hoffman, D-Bethel, are working to develop a long-term fiscal plan to be discussed during the regular legislative session starting in January.

“It’s a little more complex than what the minority has put on the table,” he said.

Stedman said he agreed that it was critical to limit spending and that the Constitutional Budget Reserve was one component that could be used in a larger fiscal plan. But he said it would be premature to adopt one component before considering the fiscal plan as a whole.

The governor supports saving a portion of tax revenues in the Constitutional Budget Reserve, but believes it’s too early to commit to a certain amount, Palin spokeswoman Sharon Leighow wrote in an e-mail. In general, the governor believes the state should slow the growth of government and save for the future, even in times of surplus, she wrote.

The Legislature continued its review of ACES on Wednesday with hearings in the Senate Judiciary and House Resources committees. The special legislative session began Oct. 18 and is expected to last 30 days.

Contact staff writer Stefan Milkowski at 459-7577.