THE BUDGET WILL ARRIVE WHILE HOUSE IS IN DISARRAY
When legislators receive the governor’s budget on Wednesday morning, all bets are off for organizing the House of Representatives.
Even though it will be Day 30 of a House without a Speaker or committees, it’s going to be every legislator for himself and herself.
There will be so much to digest in the completely revamped budget that Republicans in the House will look disorganized and unprepared on their messaging. They won’t be able to speak with one voice.
Democrats, on the other hand, already have their press releases ready, and they’ll say that the Dunleavy budget is the meanest budget ever to be proposed. They’re ready for war over the budget. This is why they played Rep. Gary Knopp for the past few weeks, while ensuring that Republicans dithered away their chance to be a united force.
The budget will be $4.6 billion, which is $1.6 billion less than Gov. Bill Walker’s proposed budget. It is a 28 percent smaller budget than the Walker budget.
This can only mean an entire restructuring of government, and many, many programs will be lopped off in the process. It’s a return to a budget the size that Alaska had 14 years ago. Back to basics.
Each of those soon-to-end programs has a constituent. Each constituent comes with an organized trade association, a lobbyist, and a strategy — however strong or weak — for keeping itself from the grim budget reaper.
Public broadcasting? It’s got a big and noisy constituency. But no more so than education, and no more so than Medicaid. The noisy competing interests will descend, and at times be very loud.
“What we’re doing with this administration is we are building a budget from the bottom up, from zero up. We’re going to build that up to where we reach our revenues,” Dunleavy said.
The Dunleavy Administration didn’t start by cutting. Instead, it started with core ideas about what government should fund and how much money is available to fund it:
- funding cannot exceed existing revenue;
- the focus should be on core functions that impact a majority of Alaskans;
- state reserves must be protected;
- no taxes on Alaskans and no taking their Permanent Fund dividends;
- government should be sustainable, predictable and affordable.
Under the current revenue that is expected, government will do less in the future, because it has less money. The only money available, beyond current oil revenues and the Permanent Fund structured draw, is through taxes or the Permanent Fund. Dunleavy doesn’t want to use either of those.
“You’re going to see a whole slew of different approaches to not just budgeting but in services and what can we do as [the] state of Alaska in terms of enlisting the private sector,” he said.
Health care, which was a main focus of Gov. Bill Walker’s tenure, did not make the list of what government should guarantee. The Medicaid program will likely be dramatically transformed, and shrunk. One in four Alaskans uses Medicaid, but it’s a program that has no cap, which means it tends to expand continuously, lacking any incentive to be more efficient.
Medicaid is also prone toward fraud. Fraud, waste and abuse account for about 10 percent of the payments made by Medicaid, which equates to millions of Medicaid dollars annually being fraudulently billed in Alaska.
The budget focus is on public safety, education, management of resources, and infrastructure.
Where the private sector can pick up services, that’s the “open for business” part:
Ferries are expected to be dramatically trimmed, opening up major opportunities for private carriers around Alaska’s coastal cities to fill in where publicly subsidized ferries have prevented private sector enterprises.
Services for seniors may need to be privatized. This opens up business opportunities, once government is not filling the need. Prisoners may need to be sent out of state, where it doesn’t cost as much to house and feed them.
The governor has already said he is not going to propose taxes to patch the hole. He’s not proposing to take more from the Permanent Fund.
“I believe government is best if it’s kept small and focused and out of the lives of people. That’s what I truly believe,” he said.
WHAT HAPPENS NEXT
This process is a discussion and the governor will open up that discussion on Wednesday at 10:30 am, during his press conference.
The Legislature will likely want something different when they see the budget on Wednesday.
Each of the 60 legislators will have an opinion about what to add back into the budget. They will not bring their red pen to the budget, but many of them will bring a list of must haves:
- Coastal legislators will will say that the Alaska Marine Highway System can’t be eliminated.
- The Fairbanks legislators will say the University of Alaska budget can’t be smaller.
- Public school advocates will say that education funding must not only be preserved, but grown.
All stakeholders will be fighting to grow the budget back, and all will be lobbying in the halls of the Capitol.
This will occur at the same time the House is attempting to organize with a Speaker, Rules Chair, Majority Leader, and Finance Chairs, something the House has been unable to do for 30 days.
The result of the organization that ensues may be that no caucus will form that does not require caucus members to vote as a group on the budget.
More likely, over the weekend a group of legislators who simply oppose the budget will form up as an opposition caucus to add dollars back. They’ll just struggle to answer the question: “Where do you plan on coming up with the money?”