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Buying a Recession:
Continued Excessive Slashes Aren’t Free
I'd love to join those using the easy sound bite. I do believe in finding waste, and cutting it. I’ve voted against wasteful spending on legislative office buildings, the Knik Arm Bridge, the Susitna Dam, and other unaffordable projects.
But what about continued massive cuts to things that keep the economy rolling, and provide people with jobs and opportunity?
There is good evidence that if you keep massively slashing the budget, everything won't be just great. It's a recipe for a massive recession.
Let's discuss facts. If you adjust the state's budget for reality – that is, if you adjust it for inflation and population growth (more people make schools, road maintenance, and other services cost more), the amount Alaska spends today per person is far lower than most of the past three decades.
Let's address a few more points. The portion of education funding used for classrooms – for teachers, curriculum, counselors, and staff – is about $30 million less than just two years ago. What kind of educational opportunity do we want for children? In many districts, including Anchorage, children are in larger classrooms, and are getting less individual attention in school. That’s a problem. We know that children are more likely to achieve their full academic potential with smaller class sizes, not larger ones.
And what does following the sexy soundbite of continuing major cuts to the budget mean for the economy and a recession? Well, Alaska is already in a recession. According to UAA's Institute for Social and Economic Research, every $100 million in budget cuts costs between 1,000 and 1,500 jobs. That makes the recession much more dangerous if you care about jobs, the economy, and maintaining home values.
Why? When you lay off teachers, Troopers, police, and other workers, they shop less, and our businesses and home prices suffer. Firing people, and ending children's or senior or disability services grants that hire people, have a damaging ripple effect throughout the economy.
I will write more. But the argument that all we need to do is make continued major slashes to a budget (that is, on a real basis, far smaller than it has been in the past decade) is an argument for a recession.
It's an argument for damaged schools, and a continually diminished university (it's been cut by nearly $50 million in just the past two years).
What’s the solution? Smart budgeting, cutting waste but not opportunity, and revenue. That means not giving the biggest companies in the world hundreds of millions of dollars a year in oil tax subsidies. And it means broad based revenue that is fair to people.
Much of this coming session will involve that debate. But ducking our heads in the sand and pretending we can just spend Alaska's one year of savings we have left, without raising revenue, is snake oil. Saying you can cut your way out of the deficit is snake oil. Many of us, along with the most conservative legislators, have cut over $1 billion from the budget over the past three years.
This will involve a big public discussion about what kind of state we want for this and the next generation. But to do that, facts matter. ISER's report mentioned above matters. And a true reflection of the budget, also provided above, matters.
As always, call if you have any questions or if we can help.