Ben Carpenter: Legislature still needs to settle on long-term fiscal solution

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By REP. BEN CARPENTER

Yesterday, the governor announced the vetoes he made to the FY24 budget. The governor’s vetoes amount to a substantial $202 million in reductions, including $145 million from the operating budget and $57 million vetoed from the capital budget.

With amendments on the first and final day of the special session, the Legislature had appropriated a total of $6.2 billion Unrestricted General Funds for FY24, including operating and capital appropriations.

The FY24 budget as passed by the Legislature included a 6.5% increase ($262 million) in agency operations over the FY23 budget, including supplemental budgets. Considering agency operations is most of the state bureaucracy, the governor’s vetoes reduced the FY24 state bureaucracy growth from 6.5% to 3.5% more than the FY23 budget.

In other words, the vetoes amount to a 3.5% reduction in agency operations from what the Legislature appropriated, and allow a 3.5% increase over last year’s agency operations.

I’m thankful for the governor’s reductions in agency operations. However, focusing on the dollar amount of vetoes, or what programs were vetoed, or even which districts are impacted by the vetoed funds is to miss an opportunity to see the bigger picture. FY24 agency operations are 11% greater than they were in 2019.

The cost of our state bureaucracy continues to grow, and that growth is fueled by Permanent Fund earnings.

The Permanent Fund dividend in the FY24 budget was reduced by $881.5 million to pay for state government. In other words, a portion of $881.5 million won’t be spent on small business in Alaska in FY24. The growth in the cost of bureaucracy also comes at the cost of reduced capital budgets and a delay or complete rejection of capital projects that would enable private sector economic growth.

At this rate, it is only a matter of time before our private sector economy will cease to directly benefit from the Permanent Fund because our state bureaucracy will consume all Permanent Fund earnings. Who will pay for government growth then?

Meanwhile, our private sector economy has been in decline since oil prices dropped precipitously in 2014-2016. Eleven percent growth in agency operations has hurt, rather than helped, Alaska’s economy.

Our state government spends much more per capita than most other states, but when national rankings of performance metrics in key social and economic areas are released, we often come close to the bottom, if not dead last. Poor performance and wasteful spending go hand in hand. Alaskans, their businesses, and our investment earnings are paying for costly state bureaucracy that is underperforming. Our state bureaucracy’s results do not justify the cost, nor the increase in spending over the past five years.

Our roads and ferries aren’t 11% better maintained than they were five years ago. Our students aren’t performing 11% better now that their Permanent Fund dividends are paying for their school district expenses. Families aren’t better off because they are dependent on government funded childcare.

For many Alaskans not dependent on state government spending, hope is short-lived. Alaskans who have the means are leaving Alaska in greater numbers than people who are arriving. More state government isn’t going to halt our outward migration or economic decline.

The annual budget fight isn’t going to solve our socioeconomic problems. Private sector economic growth and better management of state government will.

We must lead our state government through a period of innovation and improved management. Doing so will provide productive alternatives designed to improve the annual nearsighted budget fight; alternatives focused on improving communication and performance. Better management will benefit the bottom line. Our government needs to get good at and habitually perform the common management practice of measuring results and comparing those results to stated objectives. The Legislature is statutorily required (AS 37.07.014) to promote results-based government, but it is not doing so.

Two bills currently under discussion in the legislature will help improve the management of our state government.

HB190, introduced this past session in the House Ways and Means Committee, creates an independent review of state operations under the auspices of the lieutenant governor. The Sunset Review Commission will be made up of appointed Alaskans and has teeth to ensure compliance. The commission will have investigative powers and the authority to propose policy, management, and financial reforms to state departments and the legislature that must be acted upon, otherwise the entities will be sunset. The legislation is modeled after the successful Texas Sunset Commission that has been in existence since 1977 and has saved over a billion dollars in state and federal funds.

HB194, also introduced this past session in the House Ways and Means Committee, improves our existing management statutes. This measure will help the government hold itself accountable through quality control measures, systematic performance reviews, and required planning for improvement. HB194 will also improve communication between the legislature and the executive branch by implementing planning conferences on important functions tied to state spending decisions.

We won’t get better without better management.

By following our own management statutes and by gleaning the most beneficial practices from other states, we can improve our state government. By implementing HB190 & HB194, and a long-term fiscal plan, the legislature, the governor, and the lieutenant governor can lead our state through a period of improvement that includes better management of state government and better socioeconomic outcomes for all Alaskans.

I call on the Legislature and the governor to meet in special session this year specifically to address a long- term fiscal plan that prioritizes economic growth for all Alaskans. We need all hands-on deck to right this ship!

Ben Carpenter is a state representative for the northern Kenai Peninsula. He is the chairman of House Ways & Means and Legislative Budget & Audit Committees.

23 COMMENTS

  1. “For many Alaskans not dependent on state government spending, hope is short-lived. Alaskans who have the means are leaving Alaska in greater numbers than people who are arriving. More state government isn’t going to halt our outward migration or economic decline.”

    One, and just ONE, of the reasons for the PFD was to help keep Alaskans in Alaska. Cutting into the PFD had made it very difficult for most families to be here, especially during these economic times.

  2. The number of employed adults in Alaska cannot afford to maintain this size of state government going forward. The budget cannot be maintained. The 1985 budget should be our benchmark and we should be resolved to get back to it in ALL departments. The government budget size unbelievable. Let’s be reasonable.

      • And was still overly bloated at that point, as well.

        Face it, Maureen: the Alaska state government is FAR larger than it needs to be, and far larger, and spends far more, per capita than any other state government by a very large margin. And the larger and more powerful the government, the lesser are the rights and wealth of the population ‘served’ by that government. Power truly is a zero-sum game, and the people are steadily losing that game to the forces of statist coercion and tyranny which you espouse.

  3. EVERY LEGISLATIVE ACT SHOULD HAVE A BUILT-IN SUNSET PROVISION. Period.

    Before any sunsetted program could be refunded or extended, a full public accounting of costs AND BENEFITS should be required along with another vote by the legislature.

  4. I’m sorry Mrs O’Leary, but your legislative cow has kicked the lantern over and Alaska is economically and socially burning to the ground.

    And the legislature is acting like lake effect winds fueling the flames.

  5. But Ben, how does all this help push forward the ‘woke’ (sic) social and political agenda?
    From all recent appearances, that would seem to be by far the most important job of the Alaska state legislature.

    Focusing on responsible governmental management: how utterly anti-non-cis-heteronormative of you!

  6. Very well articulated! Great common sense commentary.

    In any instance, it is nice to see the problem defined and multiple solutions, or avenues to solutions, presented. It appears to me that what we have here is, actionable intelligence.

  7. The legislature decided back in 2016 the long term solution will be to completely co-opt the permanent fund. They’re doing it bit by bit and there are too many voters on the grift to stop it. We’ll be lucky if the permanent fund last long enough to prevent an income tax from being instituted by the end of the decade.

  8. At what point do we realize that reasonable and responsible elected officials won’t solve this fiscal situation? I’m guessing, what we’ll most likely discover, is that it’s most beneficial and economical to outsource this effort to an AI Program.

  9. But where would be the annual special session per diem bonus be if they actually solved something???

  10. The ship is sinking! The government will not hold itself accountable. It’s too corrupt at this point. Both state and federal government. One day when the people can no longer feed or shelter themselves or their children there will be some accountability and at the rate its going now, it won’t be long. I love my country and the majority of the politicians who run it disgust me.

    • With you 100% Lori, Ben talks about follow statutes but he despises As 39.15.010 – 100 requiring Public Official Bonds of which not one of Alaska’s Officials have them! That Statute is a fundamental accountability Law that must be enforced. By action on those Bonds all those elected & appointed individuals have something to lose if malfeasance , misfeasance & non Feasance accrues in the performance of their duties of office. If they ( those officials) can’t secure a bond their seat becomes vacate! NO NEED FOR A RECALL ELECTION ON THEM.

  11. I admire Rep Carpenter’s gumption, but the Governor might just as well have sent along a note for the House too stay home until the last six hours of the 119th day of the next session.

    Collect their pay and save us the per diem.

  12. That’s asking another generation of Alaskans leaders raised by previous Alaskans who came here to Alaska for money. If they are a first generation Alaskan like the arrivals moving from other states, they still came here for money as those since 1890s. You asking idolatrous leaders to throw their idols away before they even recognize Israel’s God of Jacob is greater than any idol they made. Just as Israel’s ancient neighboring kingdoms, these people clutch to their idols and gods. You know money is an idol. The things and values Alaska leadership clutch means nothing but to them it means everything.

  13. To not mention 180 thousand dollars spent on the railroad line to the MatSu Port, huge loss on the MatSu Port and Prison, lost funds on the Mat.Su Bridge, plus hydro dam and the natural gasline are a huge missing discussion point. Added the millions given to bail out the pension system by Parnell. Our foolish spending by politicians who snuggle up to the contractors is our biggest problem.

  14. Implementing any new programs until a complete review of every program is completed and those that are not meeting the program goals and projected outcome or are just a want, not a need is ridiculous! Live within in the budget, deficit spending, whether nation or local, is completely irresponsible!

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