Jesse Sumner: How to fix a defective budget - Must Read Alaska
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Jesse Sumner: How to fix a defective budget

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By JESSE SUMNER

How to Fix a Defective Budget

After two special sessions to create a smart and functional budget, one would think Alaska legislators would have used it to their advantage and created a budget that works for Alaskans.

Instead, the end result was an overinflated budget that was haphazardly forced through to avoid a government shutdown, puts economic pressure on Alaska’s fiscal future, and does not create a viable path forward for the Great Land.

A sustainable Alaska budget would use population growth plus inflation to find the maximum threshold on state appropriations.

In order to create a responsible Alaska budget for the upcoming fiscal year, the state Legislature should have appropriated no more than $6.18 billion — a $2.02 billion discrepancy from its first proposal of $8.2 billion.

The budget that finally passed is better than the first, as it received cuts of $1.07 billion, however, it still sells Alaskans short with a discrepancy of $957 million from the aforementioned responsible Alaska budget amount. The $7.13 billion price tag is still too high to stabilize and maintain Alaska’s private-sector economy.

The best way to address the discrepancy is with a revised constitutional spending cap, which year after year the Legislature fails to act upon.

Without a formally revised constitutional spending cap that is voted on and approved by the people, Alaska’s financial future will continue to be at the mercy of the Legislature and the whims of those in power. An improved constitutional spending cap will help ensure the values of the Legislature stay in line with the values of the people.

It would also help at the local government level: A better constitutional cap on expenditures would remove budgetary uncertainty for our municipalities and boroughs. When state budget reductions are carried out sporadically, local governments are incentivized to tax more in order to build contingency reserves.

For the past few years, Alaska policymakers have been making claims of “40% spending cuts.” That claim may be great for campaign ads, but it’s a deceiving sliver of the big picture. Recent research shows that actual Alaska state spending reductions since 2013 are closer to 18.5%, and more a result of fancy accounting than meaningful legislative action.

Smoke and mirrors accounting may benefit the Legislature during campaign season, but it does nothing for Alaskans or their futures.

While the current budget has identified temporary revenue sources, long-term effects of overspending could prove harmful to the Last Frontier’s economic health including the further expansion of the state government, contraction of our private-sector economy, or further diminished state savings accounts. Of course, Alaskans are already being proposed as the source for funding the budget discrepancy via personal taxes.

The best option for the state legislature to stabilize Alaska’s economy is to allow Alaskans to vote on a more serious constitutional spending cap and in the meantime, make the budget cuts necessary to stay under the cap.

The Last Frontier’s history over the past two decades has proven time and time again that we cannot spend or tax our way into prosperity. Hard decisions need to be made to shape a more secure fiscal future for our state.

If Alaska residents, businesses, and families are expected to create and follow a smart, priority-based budget, our state government should be held to the same standard.

Our leaders are not supposed to be creating a budget for themselves and their special projects. Our government is supposed to be creating a budget for the people of Alaska. The first budget the state Legislature proposed crashed and burned because they did not put the people of Alaska first, and instead prioritized their own self-interest and re-election campaigns.

The second budget is only marginally better. Neither of these budgets is responsible.

Alaska deserves better. We want to see our businesses flourish. We want to see our opportunities grow. Unless state government gets spending in check, the only thing Alaskans can expect to see is taxes, instability and an uncertain economic future.

Jesse Sumner is a lifelong resident of the Mat-Su Borough, a business owner, and a board member of Alaska Policy Forum.

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  • If anything these last few legislative sessions have shown the Alaska people is that we have been electing incompetence. We need to demand our elected official stand by their campaign promises and party affiliation and oath. Maybe we need a legal contract for this purpose which allows us to remove them without waiting for the next election.

    • The majorities in these last few sessions have very competently represented to people who installed them; the unionized public employee racket, the education racket, the healthcare racket, and the welfare racket. Nobody else matters to them.

  • It’s definitely amateur hour at our capital. I don’t like giving up on anything, but maybe our state government is just destined to fail. In my 40 plus years as an private adult citizen living up here, I just cant remember a gong show like what’s happening right now happening in the past.
    That said, we did vote these circus clowns in office, so as a people we need to take ownership of that fact. There needs to be` repercussions for the politicians that fail to do there duty for the people of the state,

  • Along with a balanced budget amendment, or perhaps separately if we can’t pass the first, should be a constitutional provision that makes lawmakers – the ones who vote in favor – personally liable for budget shortfalls. On smoke and mirrors: whenever you see “40% budget cut” remember that is only cut from the amount they really wanted to spend – it is NOT a cut in spending. As always Art Chance, your observations of government are spot on.

  • Both comments above are spot on. The ability of the people to ‘pull the plug and fire any legislator, at any time’ is a beautiful concept, and could be incorporated into the framework of our constitution during a rework at the constitutional convention! Right along with term limits.

  • You can’t fix something irretrievably broken. Alaska is irretrievably broken.

    From the Cold Bays version of an assembly to the US Senate our political system is poison.

    As long as Alaska is held captive by unions and imports it politicians from California we continue this slow death.

    Honestly, genuine conservatives should move to Texas or the Dakotas and leave this hellhole behind.

  • The special interests, Education Industry, government union cartel, nonprofits, crony capitalists, etc have a stranglehold on the State Legislature. Most legislators’ first objective is to get reelected and all these mentioned above control those outcomes. Why would any legislator not fund those who fund him/her? There are just a few in the legislature that stand for integrity and the Alaskan citizenry.

  • I like the way this man talks. Our legislators have one main job and that is to pass a sustainable, reasonable budget. They didn’t do their job so now they want more money for not doing said job. I think not. A tax cap initiative to put the tax cap inti the constitution would alleviate this stupidity. We need that initiative on the ballot this year before our state goes broke because of of the chosen ineptness of our legislators.

  • It’s quite clear to me, and many of my close associates, how to fix this Donny-Brook of a budget disaster! And, I could do it BUT …. I would most certainly hurt some feelings, offend some sensitive peoples with direct words and actions, and possibly break a few laws and bones in accomplishing what certainly needs to occur. All of that for what benefit?
    If Alaska wants change then, they’ll vote for the right leadership. If not then, it’ll continue to only get worse.
    FACT: One could spend a lifetime of effort and resources trying to fix what is “IRRETRIEVABLY BROKEN,” all of which, Alaska really is, and not make any meaningful progress. Alaska is heading for Park Land status, managed entirely by liberal minded bureaucrats whom will only suck dry all of the Permanent Fund and then tax everyone and everything to a miserable death.
    Alaska’s political leadership has demonstrated that their most interested in feeding their individual egos and narcissistic power trips, resulting in nothing less than a chaotic mess of malefices.
    Indeed, I totally concur that Texas and.or, either of the Dakotas (North or South) is a much smarter destination for conservative minded individuals. Life is short so, live life where your efforts, loyalty, and commitment are rewarded and respected.

  • ISER has reported that the Alaska State budget is spending less per capita than in the 1970’s when adjusted for inflation. In general people support good roads, airports and snow plowing. It is fantasy to believe the State can operate with a full PFD and no new revenue

    • Frank R., one might recall who subsidizes the Peoples Institute of Social and Economic Research.
      .
      Seems reasonable to expect this group would never jeopardize its funding, its very existence, by annoying its masters with idle chatter about strict fiscal conservatism…

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