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Sunday, October 20, 2019
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The graph that tells the story

TAXES WON’T KEEP UP WITH GOVERNMENT GROWTH

By LANCE ROBERT

Just when you think you’ve seen the worst year of government in Alaska, you find out you were wrong. The last four years were awful. We had a fiscal crisis but nothing was being done about it. There were attempts to raise revenue, but even if they had succeeded, it wouldn’t have come close to solving the problem.

Examine the attached graph, the most important one for the year, and you’ll see what every legislator knows. If you use the Permanent Fund dividend to fund government, you lose it in two years.

If you use the Earnings Reserve balance then you get about 10 more. If you then implement taxes you won’t get more than a few years (Walker’s attempt would have only raised $700 million).

The natural increase of government (a conservative 4 percent in this graph) will outpace the increase in revenue. This is what Gov. Michael Dunleavy realized when he was looking at the budget issue. It’s impossible to fix our budget based on revenues alone. If you try, you’ll just bankrupt the State in about a dozen years. You’ll then lose the University, all the retirement plans and all of those other programs you might love.

This explains why more cuts have to be made because, to get to a sustainable budget, you have to make a lot of cuts over the next few years.

The governor is making the hard decisions on how to get there and is taking a lot of heat for being laser-focused on his campaign promise to fix this fiscal situation. It may be enough to cost him a second term, but that shows the courage he has to face the problem.

Now comes the irony. The Legislature is split in two factions. There is the anti-governor faction who want to repeal all of the cuts and not pay anything close to the statutorily mandated dividend, and they are fighting the governor every step in a way that mirrors the national level politics.

An example of this is their push for an unconstitutional forward funding of education, which left no real funding in the budget for education.

Then there are those who want some to none of the vetoes repealed and want to work with the governor to solve the problem. They had tried to amend in funding for education but it was rejected by the other side. 

The governor called the special session to deal with the undone Permanent Fund dividend issue, and to give them a chance to repeal the line-item vetoes. The irony is because the anti-governor group has decided to break the law and meet somewhere else than the governor chose, they don’t have enough legislators in attendance to overturn the vetoes.

After the cuts came out they should put their heads together and come up with a compromise to restore a bunch of the cuts and fund a full dividend. The governor made such large cuts that it made for an obvious compromise. What the anti-governor group has done is to “cut off their nose to spite their face”. Sometimes in politics you just have to compromise to get important stuff done. 

So now we have all the vetoes in place, a capital budget that has no funding and we have no dividend. Legislators are talking about amending something into the capital budget, but that can also still be line-item vetoed, so they have to get three-quarters of themselves to agree. Since a few members have been thrown out of the caucus because they stood for rule of law, it’s going to be pretty hard to get that agreement now.

One of the biggest mistakes of the last administration was cutting the Permanent Fund dividend for three years. That took over $2 billion out of the economy in a recession, so this governor is pushing hard not to replicate that mistake.

A deal will have to be made, so when you’re writing all those emails and letters to the legislators, you might want to ask them to act more maturely and make some kind of deal that will work for everybody.

Email the House Minority to thank them for standing for rule of law and letting them know that you are OK with some veto or partial-veto overrides, as long as they make the trade for a full PFD.

We finally have a governor intent on solving the problem. We just need a legislature that acknowledges the issue and will rise above childish nose-thumbing to solve it.

Lance Roberts is an engineer, born and raised in Fairbanks. He is a former member of the FNSB Assembly.  

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  • Very upsetting to see such division in our state. We need to vote in representatives who understand the law and at least try to get along. It seems to me that the Governor is doing what he was elected to do, but is not receiving any cooperation from many of our representatives.

  • Precedence indeed, never before has more than half of a legislative body had the courage to admit their total incompetence and resign. Having done so, those who chose to retain their seat are now the full body and should proceed.
    The group now totals 21; a quorum is now 11.

  • Lance, Great article. Now if we can get
    the Illegal Juneau group to read it and
    agree to come to the negotiating table in Wasilla.

  • Where’s the link to the graph?

  • Well done Lance!! You stated the issues well. I hadn’t considered that the partial pfd continued the recession

  • “A deal will have to be made…”
    .
    With whom?
    .
    We’re to do a “deal” with the party of Hillary Clinton consisting of baby butchers, union enforcers, education industry enforcers, Alaska’s lobbyist army, lawbreakers, PFD stealers, liars, economy wreckers, Communist Chinese sympathizers, and child-like figures, per diem stealers, who can’t get out of their own way to create a rational budget…
    .
    …in other words nearly everything productive Alaskans despise about modern government and everything will be okay?
    .
    Or else, according to the graph anyway, Alaska’s going broke.
    ..
    Might be fun to imagine how the graph’s gonna look when life intervenes, i.e., proliferation of parasitic government and nonproductive Alaskans beyond the capability of productive Alaskans to support them, mass exodus following the inevitable mid-80’s-like recession, outright political revolt resulting from same, …
    .
    … and best of all what the graph will look like when (not if!) the Party of Hillary Clinton, Alaska Chapter, reneges on your “deal” and you discover to your shock that, just as any other Mephistophelian “deal”, you can’t do a bloody thing about it.
    .
    So the answer is no “deal” with the Party of Hillary Clinton.
    .
    “You’ve got to stand for something or you’ll fall for anything
    You’ve got to be your own man not a puppet on a string
    Never compromise what’s right and uphold your family name
    You’ve got to stand for something or you’ll fall for anything”
    –Aaron Tippin

    • The Democratic Party earned 46.5% of Alaskan votes in 2018. If you refuse to compromise them and bully your way to insane unsustainable cuts to get your free money, you’re ignoring the will of half your populace. Maybe that explains why Dumleavy’s approval is 41% and falling.

      And what exactly is an “unproductive” Alaskan? 24.6% of Alaskan jobs are “government” jobs. If you cut them all, you’ll lose another 20% of your private sector jobs, and probably half your population.

      Maybe think a little before you get out your aluminum foil hat.

      • With respect, in the world where 46.5% equals half, polls rule, metastatic government growth equals survival, and “sustainable” is the word of the year, what do you want?

  • This is a total crock, Lance.
    Your assumptions allow for your ridiculous graph that have little to do with reality and then you have the audacity to opt for a full dividend. Whew!

    • The full dividend is the law, following the law is now audacious to the insane few who do not follow reason or law. Whew is right.

    • I totally agree! This article’s conclusions are insane and incorrect. Taylor made to trick gullible people.

    • Bill,

      Show me your analysis on how Lance is wrong. Give me some numbers to back up your empty talk. Those who don’t offer a solution or don’t have a solution are the gullible ones (Bill Yankee). Just follow your “leaders” right into bankruptcy and watch the recession. I’m surprised a man of your age doesn’t believe in being responsible with finances. Do some research, present a real argument. Present some facts and historical data. The name calling is juvenile.

      • Maybe, when Lance supplies the link to the source of the graph he posted, complete with underlying data and calculation assumptions, it might be possible to show the analysis you want. Until then the whole article is just so much unsupported propaganda. Jere

  • keep feeding the monster, see what happens

    • Yes…monster…the monster that educates your children, cares for the sick, builds the roads and bridges, and protects and serves every day. You all just want your free money and don’t have the intelligence to see the consequences.

  • Very well put example of trying to explain the situation, complete with graphics, to the leftist majority in the legislature and explain, in terms most would understand, the fiscal dilemma of Alaska. I won’t hold my breath expecting the “legislators”, much less their liberal/socialist crowd, to understand it or, especially, agree with it. Not in their makeup. They have proven that, time after time. Not lack of intelligence, per se, but more of a refusal to accept reality. It seems to be the norm in that milieu. If theirs is an example of “higher learning”, no thanks. I’ll pass. Reality and common sense have a knack of showing their need when least expected and can be harsh ‘teachers’ then.

  • The rainy day is not here yet, we still have 40 – 60 billion bbl of oil left in Alaska and we haven’t even monetized our gas yet and we have 66 billion in the bank. We Alaskans haven’t even voted on turning the PFD into a revenue source into a revenue stream for the State but you have. VOTE THEM OUT !!!!

    Lets see, well first the 10 billion bbl of heavy oil above Prudhoe, Smith Bay on State land. ANWR and PET 4 where the Federal government promises a 90/10 split on Federal lands and the Buford and the Chukchi Sea and the North side of the Alaska Peninsula in the Bristol Bay Basin are a few and I bet there’s more. Oh on State land that Great Bear has, the fracking of three-layer oil-bearing rock at the Foothills of the Brooks Range Plus 100 years of Natural gas we still have to monetize.

  • Leave it to an engineer to provide a solution.

  • “It may be enough to cost him a second term, but that shows the courage he has to face the problem.”
    ***
    Give credit where credit is due. This one stands apart in acknowledging how very unpopular these vetoes are — 31 percent, he’s even down in the Mat-Su. Dunleavy promised painless “efficiencies” and so far he’s delivered devastating cuts and no PFD.
    ***
    Attention future Dunleavies — once your billionaire masters are done with you you won’t have your position and you won’t have the respect of your community. But hey you face down the problem you created, right?

  • If politicians were good at math we wouldn’t be in the situation we are in, the only math they seem able to do is how many votes they need to get elected/reelected.

    • Yup that is the only math they know!!

  • If by “government growth” you mean more and more people demanding free services you have a point. Without some way to correlate populace with the services provided budgets will sink into debt 100% of the time.

    .

    TANSTAAFL (there ain’t no such thing as a free lunch) even in Alaska, the land of oil field largesse.

  • This state does not have a money problem. IT HAS A SPENDING PROBLEM.

    • 100% agree! and if do not agree they should move. They will not be missed and perhaps the Alaska spirit can rise again!

  • The graph appears to be a document from a State of Alaska website or other official source. I still want to know the link (URL) for that site so I can try and find out what assumptions went into producing it. Better yet would be a link to the actual data underlying the graph and/or the spredsheet which did and presented the calculations.

  • Agreed! While the State of Alaska emblem is clearly visible, the link and data should be provided. In academics, presenting the graph as is would be considered dangerously close to plagiarism.

  • Excellent job and great information. Legislators “thrown out of caucus because they stood for the rule of law.” I am astounded. Albeit maybe I shouldn’t be? ?

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