OPINION: Here’s some real math to ponder in Alaska budget debate

Rep. Les Gara

Published Feb 16th, 2017 by Alaska Dispatch News

Political soundbites that propose easy fixes Alaska’s massive budget deficit get votes.  They’ll also get you one of the worst recessions in Alaska history, and a state where your children can’t find a job.  You deserve real information instead of soundbites, so you can tell your legislators the path you prefer.  Politicians who seek to get votes while the economy sinks are tempting to listen to, but they are doing you a disservice. We lost 9,000 jobs last year. Letting that continue isn’t a future.

I don’t have the perfect solution and am still listening to you.  And I’m proud to be part of a new House majority of Republicans, Democrats and Independents whom, even with different views and proposals, know we have to get Alaskans out of this economic mess now. 

I don’t like putting the burden of the deficit on the backs of the least privileged, and workers trying to make ends meet, while protecting those with the greatest privilege.  A plan needs to be balanced and fair to all, not just to those with lobbyists.

But let’s start with a harsh reality.  Economists have made clear that our job-killing recession will likely last more than 4 years if we don’t make tough decisions to fix the deficit NOW.

Here’s some information you need so you can tell us what you think will work best.  Government should not be a top down process. 

Since 2014 the state has cut state spending by almost 40%, from over $7 billion to roughly $4 billion.  But easy cuts won’t fix the remaining $3 billion deficit.  I wish stopping personal spending abuse by some politicians I can’t control would solve the deficit. Their travel and hotel spending abuse has cost hundreds of thousands of dollars, and public trust, but not $3 billion a year.  Our coalition will look to stop their abuses.

Here is one fact some politicians don’t like to admit.  Smart budget cutting has been necessary to deal with the deficit.  But the University’s Institute of Social and Economic Research shows every $100 million more in budget cuts kills 1,000 – 1,500 private and public sector jobs, as less money makes its way to our stores and businesses, which then lay off workers or close.  Those who want $1 billion more in budget cuts will kill 10,000 – 15,000 more jobs and continue our recession for a decade.  And this soundbite proposal doesn’t solve our $3 billion deficit or stop the loss of our dwindling savings.

The truth is we’ve found most of the cuts to waste, like the $1.7 billion Knik Arm Bridge boondoggle.  The cuts are now going into basic services, though we should always look for waste.  I have voted for most of these cuts – though fought cuts to kids, schools, public safety and the University because opportunity and safe streets matter.  So where are we in the budget cutting process?

The state has cut 50% of the funds we send to communities, which are needed to hire local police to help stem the growing tide of crime.  The state has cut the budget for prosecutors, who now turn away more criminal cases, endangering our communities.  Classroom funding for teachers and staff in our public schools is $25 million less than two years ago.  The University has been cut by $50 million, and professors and students are leaving, or thinking about leaving.  Our future isn’t in losing workers and innovation to other states.

I want to get a better share for our oil, and stop paying unaffordable corporate subsidies to companies that selfishly say you should cover the deficit without their help.  But that might, at current oil prices, save us a few hundred million dollars.  I want a much fairer share for our oil, but that’s not a deficit-eraser unless we adopt taxes so high they ensure oil companies lose billions a year. 

Some have generously offered to chip in with an income or sales taxes.  Income or sales taxes can raise $500 – $700 million.  That still leaves a $2.3 – $2.5 billion deficit.

Using some Permanent Fund earnings could raise roughly $1.5 billion and, with measures asking the biggest companies and wealthiest to chip in, could help close the deficit.  The amount we could raise from legally usable earnings depends on what size Permanent Fund dividend we want.  I believe in a strong Dividend, which is important to those who have trouble making ends meet. 

We could significantly increase last year’s $1,000 PFD, for example, to $1325.  That could allow $1.6 billion in annual legally usable Permanent Fund earnings after paying the Dividend. 

If you want a $2,000 Dividend, then the math means more cuts to public safety and schools and those with disabilities, and more lost jobs.  I wish that wasn’t a fact.  We could raise the Dividend when oil prices rise, and we receive much more oil revenue.  That wouldn’t hurt anything. 

Pot, alcohol and fuel taxes, if you support increasing those, might add another $100 million, not $3 billion.

I just want, mostly, to share the math.  Getting to $3 billion isn’t easy.  No solution will be as popular as those irresponsible political soundbites you hear. 

I’d rather hear from you than those who peddle false soundbites.  Please chime in! 

signed Les Gara
Rep. Les Gara is Vice Chair of the House Finance Committee.

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