Politics: The Birth of The Fiscal Policy Caucus

(Author’s Note: This is an excerpt from an unedited transcript that contains typos, grammatical errors and an occasional bad word. This the third in a series published every Friday.)

To read the first excerpt or second excerpt.

(Excerpt 3)

As I turned my head, out of the corner of my eye I saw Barnes charging at me from across the room, screaming “I’m not a bumbling idiot.” Her eyes bulging in anger, her arms swinging wildly. I froze like a duck on a pond. The only thing I could say was “Oh Shit.”

She drew closer. Three feet and closing. I could smell the cigarettes. That’s when the hand of God intervened. At that very moment it seemed like the hand of God, but in reality it was the hand of Gail Phillips.

To this day I have no idea how Phillips stood and pivoted into the line of fire from Barnes so quickly. Within seconds I went from expecting impact, to being ushered away by Phillips. The caucus room erupted like nickel beer night.

Five days later the legislature would adjourn after the Senate failed to muster the necessary votes to put the amendment before voters. After that incident during special session in September 1999, I never spoke another word to Ramona Barnes.

The razor thin nerves and short fuses that marked the special session were understandable. When you spend 120 days pushing, pulling and fighting to get an agreement on how to balance the state’s massive fiscal hole it takes a toll. With oil hovering around $15 per barrel, the state’s savings were just a few years from being exhausted. The house took the lead and passed a fiscal plan to lean on permanent fund earnings without a vote of the public. Unfortunately the final compromise negotiated was no solution. In an attempt to get the proposed fiscal plan passed by the senate, the house and governor agreed to put it to a vote of the public. This was a huge mistake.

On September 14, 1999 roughly 185,000 Alaskans went to the polls in a special statewide election, and over 83% of those voters said no. It was an unmistakable rebuke of the legislature with the public soundly rejecting an attempt to balance the budget using permanent fund earnings. It was absolutely insane to believe that Alaskans would vote to give up $600 from their October check, after getting free state services for almost two decades.

However, while many pointed to the high percentage of no votes, there were few conversations about why 83% of the voters told lawmakers to go back to the drawing board. My district was no different on the scoreboard, but in so many of my individual conversations with constituents, I heard different reasons why they voted no.

Some were opposed that we were relying on permanent fund earnings, which would hurt lower income Alaskans. Some thought we needed a more balanced package, with an income or sales tax included in the mix. Still others thought the budget should be reduced to meet revenues and yet others thought higher taxes on oil & gas companies should be part of the equation. There wasn’t one specific reason why Alaskans voted against the fiscal plan, in fact there were multiple reasons.

Regardless, the shellacking the September 1999 plan received at the ballot box caused most lawmakers to turn and run away from addressing the yawning fiscal gap. The resounding rejection didn’t cause the state’s fiscal crisis to disappear; it made it worse by enabling a political leadership crisis.

When the legislature reconvened in January of 2000 it was clear that any forward movement gained the prior year on a fiscal plan was lost. Now it seemed that the poorly conceived idea of a public vote was causing some lawmakers to abandon leadership, which led me to observe in the press that many lawmakers were hiding so far back in the closet “they couldn’t see the door knob.”

Ironically, it was out of the rubble from the September vote, that the bi-partisan fiscal policy caucus was created. In January, just months after the public squashed the legislature’s first attempt at solving the fiscal crisis, a handful of lawmakers began meeting at Juneau Republican Bill Hudson’s Mendenhall Valley home to talk about how we could resurrect the conversation.

The initial group included lawmakers such as Whitaker, Murkowski, Phillips, Hudson, Austerman and Davies. We created a strategy to force the fiscal conversation back into the mainstream.We identified legislation that would need to be vetted to see how it might be part of the solution. We planned on how we would navigate the majority leadership since this was not a sanctioned committee.

In March, after two months of weekly meetings at Hudson’s house, we were ready for our public coming out party. On a snowy Tuesday morning we called a press conference to announce the creation of the Fiscal Policy Caucus. One thing that warrants a mention, when you hold a press conference, even for the most commendable reasons, you should always assume the toughest question is going to be the first question.

So there we stood. Six Republicans and one Democrat about to announce to the world we were prepared to fight the battle again. After brief introductory comments from each of us, the questions from the press began to fly. The first question came from Associated Press reporter Paul Queary. Your plan calls for three hundred million in new revenue in addition to using permanent fund earnings, will there be taxes, he asked.

Without hesitation Rep. Alan Austerman, a cool, calm, voice from Kodiak stepped to the microphone to answer the question. In the span of a few seconds, it felt like he said the word taxes at least a dozen times. If we need taxes, we’ll have taxes. We might have to have taxes. Taxes are definitely on the table. It felt like an endless loop of promising taxes. As Austerman was answering the question, I glanced over at Rep. Lisa Murkowski standing next to me. The look on her face said it all. We were taking a risk, a huge risk.

In the years following I always marveled at the caliber of leadership that was on display that morning when the Fiscal Policy Caucus was born. It was an odd mixture of freshman lawmakers that didn’t care about the risks, and veteran lawmakers who knew risks had to be taken. It was Hudson, Phillips, Austerman and Davies putting their arms around Whitaker, Murkowski and Halcro, running interference with leadership and providing the credibility for other Republicans and Democrats to soon join the effort.

The next morning on the front page of the Anchorage Daily News they announced the creation of the Fiscal Policy Caucus. The story outlined the tools we’d use to further the conversation about using permanent fund earnings and new taxes to fill the budget gap. However, the only picture they published on the front page was my head shot. Seven lawmakers standing at the podium talking taxes and using permanent fund earnings and I’m the only one pictured on the front page. Not a good email day.

A few days later an editorial in the Daily News lauded the creation of the committee. “Saying they’re upset with the Legislature’s inability to draft a long-range fiscal plan, moderate Republican legislators joined with Democrats on Tuesday to find a new path. We’re frustrated at the lack of movement and any type of discussion regarding a fiscal plan, said Rep. Andrew Halcro, R-Anchorage.”

As the legislative session ground on in spring 2000, the Fiscal Policy Caucus began enlisting research help from various sources such as ISER and the Department of Revenue. With the prospects of the November election just months away, our group needed to get far enough into the process so we’d be able to resume without delay after the election. It was important to bridge the sine die year not only for momentum, but to make it a campaign issue. By the end of session we all felt confident.

Beginning in June, the march towards the November 7, 2000 general election was dominated by the state’s dire fiscal outlook . Lawmakers who strongly supported finding fiscal solutions would face attacks from primary and general election opponents alike and still win re-election. But there would be an underside to the election that few in the public would see. Accusations would be levied, threats would be made, and Bill Allen would have his day.



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