By WIN GRUENING
SENIOR CONTRIBUTOR
Much of the reaction to Gov. Dunleavy’s proposed budget was more than predictable…it was inevitable and even calculated. Some of it was over-hyped response that politicians and special interest groups fall back on before mounting a public relations campaign to combat what they perceive as a threat.
Just a few of the public reactions include “playing games with hundreds of thousands of Alaskans’ lives”, “devastates the legacy we’ve inherited,” “outrageous,” “fiscal tyranny, malpractice and folly,” “morally bankrupt” and “declaring war on Alaskans”.
While no budget details were prematurely leaked, the administration made it clear it would deliver a significantly smaller budget.
Since education and social services comprise the bulk of Alaska’s discretionary budget dollars, it shouldn’t have surprised anyone these two components reflected large reductions.
Indeed, Gov. Dunleavy’s declaration that budget expenses would equal revenues without additional taxes (or rosy oil price predictions and accounting gimmicks used by prior administrations) was nothing more than following through on his campaign promises.
In early campaign position papers, Gov. Dunleavy said:“Some politicians tell us that Alaska’s operating budget has been cut to the bone. This is nonsense. Alaska doesn’t suffer from a problem of too little revenue. Rather we suffer from a bloated government that spends beyond its means. The worst possible response to a struggling private sector is to impose a statewide income tax. We can’t tax our way to prosperity. As Governor, I will introduce significantly lower budgets, and I won’t hesitate to use my veto pen to hold the line.”
Alaskans convincingly elected Dunleavy (presumably based on his positions), so this budget is exactly what we should have expected.
According to the Alaska Policy Forum, from 1961 to the 1969 $900 million Prudhoe Bay lease sale, the per capita Undesignated General Fund (UGF) budget in Alaska averaged $1,600 per person, updated to 2014 dollars. After the lease sale largesse, it jumped up to $5,000 per capita, the 1975 starting point that many budget-cutting opponents use to convince legislators that today’s budget isn’t that much different. But current budgets have been as much as three times the pre‐oil UGF per capita budget before 1969.
WHY HAS IT TAKEN SO LONG?
The question Alaskans should be asking themselves now is not why the budget is being cut so drastically, but why it has taken so long to have this conversation. For years we’ve “balanced” our budget with savings and now the state’s savings accounts are almost empty. Waiting any longer would be irresponsible.
The other question Alaskans might ask is how best to determine what facilities and level of services are critical enough to be funded by public dollars. The proposed state-wide budget reductions will force some of these decisions down to the municipal level – arguably where they should be – closer to the people.
According to the Alaska Municipal League, this cost-shifting to municipalities could be almost half the total proposed cuts. So, while no new taxes may be proposed at the state level, communities could be facing much higher taxes combined with significant service reductions at the local level.
Obviously, the Governor’s budget is a starting point for discussion. It needs to pass both legislative houses and survive the scrutiny of concerned Alaskans. Communities will need to weigh-in with their legislators to make their case.
This will be a painful process that is long overdue. Until the smoke clears, local governments should insist their leaders be fiscally conservative and keep all options open before funding wish-list items or other non-essential programs and services.
Budget-cutting opponents should resist the temptation to throw rhetorical fire bombs. There are many proposed budget items that deserve robust debate. But discussions should be centered around whether changes will add or subtract from core functions of government, and if they are additive, how they will be funded.
If, instead, new taxes are levied first, as many Democrat legislators would prefer, Alaskans are locked into the same problem that has confronted past administrations and legislators: How to divide up available revenue without regard to whether the services being funded are fairly allocated, efficient or critical.
Alaska can be grateful they elected a governor with the courage to choose the former approach instead of the latter.
Win Gruening was born and raised in Juneau and retired as the senior vice president in charge of business banking for Key Bank in 2012. He is active in civic affairs at the local, state, and national level.
I can only speak for FNSB and the writer hits it squarely on the head. Local municipalities must be fiscally responsible. That is not happening.
Thank you, Win Gruening, for reiterating the hard truths we faced before we elected Mike Dunleavy. Thanks also, for congratulating Alaska in electing a statesman with the backbone to govern straight-up. For those whom see our Governor’s early budget comments as disastrous or unfounded, well, I’m not sure where you’ve been. They are directly correlative to the reality of the day. Yes, our Boroughs and Cities will have an even tougher row to hoe. Yes, things will be less cushy than these last several years of faking it. So for those who’ve toned muscles kicking the can down the road and now think taxing Alaskans is a vehicle to prolong the cush, just consider who you’ll be kicking with that.
Time to conserve those North Slope Burough fat-cats out of existence. And while we’re at it how about some political payback for those traitorous trough hogs over at ASRC? Those guys knew what they were getting when they backed Governor Dunleavy and now they get to play dumb as they stab him in the back? No way!
If it turns out that new revenue is required it is more equitable to push at least some of the burden down to local governments where users can be taxed for the services they need. It is patently unfair for people in Ketchikan or Fairbanks to pay a statewide tax to support services in Anchorage.
Spot On. Those of us that remember what it was like to live here before North slope oil changed everything understand. We remember what it means to have limited government, more local control along with a deep sense of personal responsibility for yourself and family. I can remember conversations with my father and Grandfathers as the $ started to flow and Government started to grow and schools started to cost tens of millions of dollars with no expense spared. I remember attending the same schools, sitting in the same classrooms and in many cases the same chairs that my parents sat in because they were what our communities could afford. I can still hear my dad saying ” What are they thinking? We wont even be able to afford to heat these monstrosities after the oil $ goes away.” He wasn’t wrong.
Scott, thanks for setting forth practical reality.
Practical realities like building a new unnecessary $70 million school in Juneau right after a $54 million renovation of the old school?
Seems to me Coogan Construction has done pretty well feeding on State pork.
Just about every day for the past week-plus, I’ve read a new story in the ADN by Checkered Suit Dude playing up another angle on the budget. At least I was able to come here and read a neat, concise explanation of the situation. Wouldn’t it be nice to see the same from the mainstream media instead of doom and gloom and a bunch of quotes that the interviewees can clip out and attach to their resume? If they wanted to summarize what they’re pushing, perhaps something like a film trailer would work. Now that the Dungeon of Doom has burned down, they could hire the barker from that attraction to do the voice-over. I can just see it now: “Mike Dunleavy is The Boogeyman. And he’s coming to get you. Bwah ha ha ha ha!!!!!!”
Quick to listen and slow to speak ! Let’s support Dunleavy ! We knew we needed CHANGE !
Can we start with all the Dunleavy hires? at outrageous salaries. those are our benjamins he is paying to outsiders for fake jobs.
Where’s the $200K you stole, Cooper? Are you still in Mexico, or did you move to Juneau?
Once again Win nails it. In a nutshell, Dunleavy cleaned the table off and laid out a new tablecloth; now we all need to get busy working together resetting the table once again. Except, this time, every faction needs to justify their needs from the bottom up rather than from an unrealistic position of full funding.
Yessir Wayne, just like Senator Micceche said: “We have a choice as to whether/not we want to live like cavemen.”
I wish that Alaska’s leaders would take a trip to the Persian Gulf. We don’t have a revenue problem, we have a vision problem. For example, the UAE has completely positioned itself for a strong economy when the oil runs out. They have successfully diversified, installed a 5% VAT last year, and have recognized that it kills their economy when money earned there is sent somewhere else. I see no vision from our governor except for a balanced budget from a broken, vision free system.
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