A fresh, more productive approach to legislative budget analysis? - Must Read AlaskaQ
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Saturday, February 27, 2021
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A fresh, more productive approach to legislative budget analysis?

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Until proven otherwise, many legislative observers are saying that Alexei Painter, the young director of the Alaska Legislative Finance Division for the past five months, is the real deal: A knowledgeable, politically neutral, good-faith analyst working to inform the Legislature about the realities of the state’s budget.

He’s somewhat of a rarity in liberal-washed Juneau.

Just after being hired by the Legislature, Painter produced his first comparison of where the State of Alaska’s fiscal situation is at, weighing the matters of current policy and current law.

He presented the current Legislature’s policy as one in which the Permanent Fund dividend is the last item funded by the Legislature. But he did so without judgment.

On Friday, he presented a clear-eyed analysis of the governor’s proposed budget, which had been submitted to the Legislature in December. His analysis was neither friendly toward it, nor full of “tone,” as sometimes was the case with his predecessor David Teal.

“The overview provides a starting point for legislative consideration of the Governor’s spending and revenue plans. It does not discuss the merits of budget plans; it focuses on outlining the fiscal situation and presenting the budget in a way that provides simple, clear information to the legislature,” Painter wrote. Indeed.

Painter went on to describe how Alaska is in its ninth straight year of deficit spending.

“Though the State has reduced UGF expenditures by 43% over that time and increased revenue by setting up a structured draw from the Permanent Fund, we still face a structural deficit. During this period, the State has gone from $16.3 billion in reserves to under $1 billion at the end of this year.
The Governor’s FY22 budget request is smaller than the FY21 budget (other than the Permanent Fund Dividend) but still leaves a deficit of over $2 billion, which the Governor fills by increasing the draw from the Permanent Fund beyond the statutory sustainable draw,” he wrote. In fact, that is the case.

“The Governor also draws an additional $1.2 billion from the Permanent Fund for a second dividend payment in FY21, for a total of $3.2 billion in overdraws from the Fund,” he wrote.

That, too, hard to argue with. It’s just the facts.

“The Governor recognizes that this is unsustainable, however, and in his budget release he emphasized that these draws are necessary because of the COVID—19 pandemic. The Governor’s long-term plan calls for balancing the budget in FY23 by adding $1.2 billion of unspecified new revenue, reducing the dividend by $400 million, and further reducing agency operations,” he wrote.

The unspecified new revenue is something that has caught the attention of others, as well. The plan seems vague.

“The legislature faces dual problems: a state struggling with a historic pandemic that has caused record unemployment and economic hardship, and a long-term budget crisis that has drained the State’s budget
reserves. The incoming legislature faces difficult choices that will have a lasting effect on the State of Alaska,” he wrote.

Painter fills in a role recently vacated by Pat Pitney, who is now interim President of the University of Alaska system, and David Teal, who was the budget guru for the Legislature for 22 years, who seemed to lose patience with the Republicans in the Legislature during his final few years, while siding with Democrats who sought broad-based taxes, such as an income tax or state sales tax.

Painter returned to the Legislative Finance Division after serving as a Policy Analyst with the Alaska Office of Management and Budget. He had earlier served for more than five years as a fiscal analyst, senior analyst and capital budget coordinator for the Legislative Finance Division. And he was an economist for the Alaska Department of Revenue. He and his wife own a small bookstore in Juneau, Rainy Retreat Books.

Although he most certainly comes from the Democratic tradition — the son of State workers and a former aide to Reps. Beth Kerttula and Reggie Joule — Painter has found a way to present budget choices in a nonpartisan manner.

A member of CIRI, he is especially interested in Alaska Native issues, and appreciates what policy has done to better the lives of Natives.

“When I think of how Native policies were implemented, I really think about how lucky we are as Alaska Native people. For the most part, we have the opportunity to live close to our original lands and enjoy our traditional values, if we so choose. Compared to California, we have a much better ability to control our own destiny,” he told the CIRI blog while he was finishing up his master’s degree at U.C. Berkeley.

See his budget overview and reports at these links:

01.16.2021 Overview of the Governor’s Budget
01.15.2021 Governor’s Subcommittee Books
01.15.2021 Governor’s Capital Budget Reports
01.15.2021 Governor’s Operating Budget Reports
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Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

Latest comments

  • I have to agree with Suzanne: His analysis is correct and it appears he has been reading my comments! LOL.
    I will take it a step further and say anyone with the skill to balance a checkbook would know that there is no “reducing” the Dividend – it has to be ended or at least suspended. Even with a ZERO Dividend, we will have a structural deficit that will need to be bridged by further cuts to State services. Borrowing more money from the meager amount left in the CBR or raiding the Permanent Fund Earnings Reserve would be incredibly irresponsible and leave us vulnerable to the next crisis to come down the road. Regarding Dunleavy’s justification for raiding our savings for the 10th year in a row I say Bullpuckey! We have had 9 years to correct this situation and now the chickens have come home to roost! Send a note to your past and present legislators reminding them of their part in this travesty. Its even worse than that – our capital budget is reduced to the bare minimum and there is not one penny available to re-pay the CBR (as required by the Alaska Constitution).
    So by now you know what I think of the Dividend – it is POISON and needed to be suspended years ago. It is the root of every budget fiasco since we began deficit spending 9 YEARS AGO!
    Let’s suck it up and end it now – we will be a better State and people for it.

  • And one more thing: The Socialists can forget about new income or sales taxes to support the continuance of the Dividend. Your theories of why the Permanent Fund income is “different” than any other State income has failed in the Alaska Supreme Court UNANIMOUSLY! (Much as the original Dividend program failed in the Alaska and U.S. Supreme courts). Furthermore a tax on the people to sustain the Dividend will also fail constitutionally (Article 9, Paragraphs 6 and 7). We may need to reimpose an income tax (I oppose a sales tax) but ONLY after the Dividend is ended (in its current form at least). Without the Dividend messing with people’s heads, we can get back to a real honest debate over taxes versus services. We should be ecstatic that we have the Permanent Fund that can sustainably provide $3-4 billion a year to fund Services that otherwise would need to be paid by enormous taxes on the people. The sooner the legislature adopts this constitutional logic, the sooner we can repair our ship of State which has now run “hard aground”.

    • Right on!

    • Yes! The PFD has to cease before a state income tax is brought back into the revenue picture. A dividend is what is paid out after the budget is balanced and there are funds leftover. A state income tax will be paid by only the people who are paying federal taxes. We already know that only 1/2 of the working/earning US population is paying a federal income tax, the rest are riding in the wagon with their hands out waiting for gifts. Sadly, these riders always vote for the political party that promises more gifts. The same will apply to Alaskans paying an income tax. For the state to tax 1/2 of it’s working/earning population just so it can pay a dividend to all of its residents is income redistribution in its purest form.

  • Wow! I would have never known that the state legislators had the same budget guru for 22 years previous. I would have thought how terrible our state finances have become was the cause of bad budgeting from the legislators themselves. Good thing that previous “budget guru” left. Maybe Alaska can get back on track again.

  • It’s funny to see people wanting income taxes and an end to the PFD. As if that will do any damn bit of good.

    The PFD is the least of our concerns and all an income tax will do is increase outmigration to states with a lower cost of living.

    Tough but simple facts are Alaska has substantially more government than it can afford, has failed to create a diverse economy, and has been Californicated beyond redemption.

    If you really wanted a sustainable budget, the capital would move to Anchorage and the per diems would stop, all union contracts cancelled, UA contract to one campus, the state would privatize rail and ferry lines, sell state land to the highest bidder, and do something to fix the homeless problem (make Alaska a decent place to live again).

    Then take the federal government to court to get control of our land.

    At the next election vote out the Cowardly Lion Dunleavy and vote in someone with a spine and a lick of common sense.

    Trump will get re-elected before any of this happens

  • I didn’t know they taught such useless skills as analysis and math at Berkeley, I though it was more about their feelings, art, and how to protest!
    .
    It’s nice to hear that there is someone in Juneau actually looking at the numbers in a realistic manner, Hopefully more of our elected representatives will pay attention.

  • I agree that there will not be an income tax concurrent with the PFD. That might even fail before the US Supreme Court. But an income tax is the wrong tax for Alaska. Year-round state and municipal government employment exceeds all of our productive employment – manufacturing, mining, agriculture, what have you – COMBINED! We need more people producing what Alaska sells to the rest of the world. We have the lowest in-state productivity of just about everything and the lowest adult workforce participation (aside from government) in the nation. Meanwhile our relative wages for nongovernment professionals and blue collar has steadily declined yet we have very high per capita consumption. No, there is no state policy anyone can contrive that would be worse for the Alaska economy than an income tax. Our population is already declining, and the people leaving are not those on SNAP and WIC! Our problem is not how to support this huge government we built with petroleum revenues. We need to understand that we can only have as much state and local government as our economy can afford. We need to pay down debt with the remaining dollars we have. We need every town, city and village to pay for the same proportion of local government costs. We need to look at all the money-losing businesses the state maintains and quickly get out of them; RR, missile launching, low income rentals, mortgages, student loans, parks and campgrounds, rural power generation, marine freight, marine passenger transportation, etc. etc. Sorry to be so blunt but anyone who looks at our economy and concludes that an income tax would be helpful is an idiot, a socialist, or both.

  • “The legislature faces dual problems: a state struggling with a historic pandemic that has caused record unemployment and economic hardship, and a long-term budget crisis that has drained the State’s budget
    reserves. The incoming legislature faces difficult choices that will have a lasting effect on the State of Alaska,” he wrote.

    Historic pandemic reality
    The people and businesses in the State of Alaska ARE facing: Historic never ending, out of control local government imposed, fear based, pandemic mandates – (fill in the problematic outcomes).
    The people and businesses of Alaska face personal budget crisis’ that have long-term domino effects.

    State Budget:
    It is the legislature and governors job to set a budget for our state, and that means looking for revenue to fund it.
    In the long term, the people will be the cash cow. This is inevitable – shown by the consideration of pending taxation to keep filling the piggy bank that funds large government.

    Back to the difficult choices the legislature will have on the pandemic narrative.
    Time has come to review States who have successfully dealt this ‘illness’ without using the overcontrol of government pandemic mandates.
    Stop throwing the baby out with the bath. It’s time to let up on pandemic control of people, holding arms behind backs while telling us that it is for our own good – saving us from DEATH – has become transparently overused to implement government overcontrol.
    Enough time has passed to focus on real life positive roads to recovery and STOP the ‘accept government mandates or DEATH by lethal pandemic’, sales job.

  • With respect, we reject the apparent premise that Permanent Fund Dividends must be sacrificed just because state officials decide it’s necessary to promote survival and growth of state government, which as everyone knows should be Job #1 for every productive Alaskan.
    .
    The takeaway is CIRI officials let it be known that an income tax, maybe a sales tax too, is okay… means more money for their non-profit enterprises, especially if they grab their piece of the Permanent Fund… nobody in their group, or any other Native corporation, will pay an income tax or a sales tax, and it’s all good… for them.
    .
    Budget blarney is just that… increasingly extravagant wish lists, the loudest getting the most attention.
    .
    Of course Alexei offers no judgment. With no verifiable, factual data from a comprehensive forensic audit of state finances and management practices, what is there to judge?
    .
    Not a word about billions of dollars that boroughs, cities, and the Alaska Municipal League have rat-holed out of taxpayers’ reach, that might go along way to reducing the “deficit” if returned to the Treasury… why?
    .
    We note with profound cynicism the apparent persuasion toward sacrificing Permanent Fund Dividends if state officials decide survival and growth of state government may be at risk, yet CIRI and other Native corporation dividends seem immune to such threats.
    .
    We note with just a teensy bit of envy how CIRI dividends thrive apparently unthreatened by anything like the lobbyist half of Alaska’s lobbyist-legislator team.
    .
    It’s okay for Alexei to opine “When I think of how Native policies were implemented, I really think about how lucky we are as Alaska Native people. For the most part, we have the opportunity to live close to our original lands and enjoy our traditional values, if we so choose.”
    .
    But… Alexei could have opined just as easily that productive non-Native Alaskans don’t have such luck, burdened as they are by their gluttonous lobbyist-legislator team, public-employee union-management teams, a moribund economy made so by government-mandated China flu hysteria, the Biden-mandated ANWR drilling moratorium, and a ranked-choice voting system to make sure things stay this way.
    .
    But that won’t happen will it? That’d be a little too fresh, too judgmental, yes?

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