Time to let go and get it right - Must Read Alaska
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Tuesday, August 4, 2020
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Time to let go and get it right

By SEN. SHELLEY HUGHES

The sound of the crowd is at fever pitch. The intensity is explosive. “Reduce the budget”vs. “find new revenues” is the fierce battle of tug-of-war underway in Alaska.

Let’s take a good look at the players.

On the “New Revenue” end, rope fibers fray as two team players struggle for the lead position while audience members break into factions, some fans of “Raise-Oil-Taxes”, others cheering “Raid-the-PFD”, and some ecstatic and googly-eyed because of the potential windfall for government if both players stay in the game and win. 

At the same time, a loud bass sound rumbles as a wave in a large packed section in the stands rises and chants boos in unison. The “Hands-off-Our PFDs” crowd boisterously bellows against the “Raid the PFD” challenger. Thundering shouts and another wave pick up in the bleachers from the “Bad-Unfair-Tax” crowd as they rail against the “Raise-Oil Taxes” contestant. 

Meanwhile, on the “Reduce the Budget” end of Alaska’s tug-of-war rope, a very tall player with scissors in his pocket is checking the tension on the rope as every few minutes team members, also with scissors in pockets, rotate on the line to lend a hand and give a good, strong tug. 

The noisy clamor on this end is not so confusing. It’s just two groups in an uproar. The “Wailing-and-Gnashing-of-Teeth” crowd sobs incessantly that life in Alaska as we know it will end if these guys win. The “Necessary-efficiencies-everyone-duh” crowd rolls their eyes at the wailers, followed by jumps and shouts of glee when they notice their favorite team’s scissors sparkle in the sunlight.

What a scene. Without an emerging victor in sight, could there ever be a more fractured crowd or more opposing forces?

This tug-of-war has been underway for five years. That’s right: five years. Ever since the price of oil dropped.

Here’s the good news. The tug-of-war has to end soon. Why (and this is the bad news)? Savings have dwindled. Incoming revenues don’t match spending. This is catapulting us to a new point, to a crossroads, and we have no choice but to act.

So does that mean one team just all of a sudden needs to pull harder, cause pain and rope-burns, and break the stalemate? That could happen but it’s unlikely – if the last five years mean anything.

At this crossroads, I believe it’s time to ask: Is there a better way? And is it possible for this to end well? The answer to both questions is yes.

I say, it’s time to let go of the rope, everybody. Set it down. 

What we need now is pivotal and factual budget information and answers to questions to know whether and where we can reduce and whether and where state services are lacking. And we don’t need political responses to those questions. We need objective, unbiased responses. 

What Alaska needs now as we broach this crossroads is an objective, unbiased State Auditor who is independent, neither beholden to the Legislature or to the Governor, but who is accountable to the people of Alaska. State services are for the people and revenues are derived from the people. Who better than the people to hold this position accountable? 

We can fight and bicker over whether we need more or less money in the budget along majority/minority or party lines. We can fight based on our own perspectives and biases. We can fight over our most, or our least favorite programs. We can pit one special interest group against another.

But wouldn’t it be better to get factual data, to get expert recommendations with the effectiveness, efficiencies, statute requirements, constitutional obligations of each program, of each division, of each department factored into the equation, from someone who has no skin in the game, from someone who abides by approved standards, principles, and practices, from someone who has the time day in and day out to get into the weeds, from someone who has the skills, the training, the focus and does not stand to benefit one way or the other? Yes, this would be better.

I’ve observed how well this concept has worked on a small scale each year as the auditor we do have (with her small team) under the direction of the Legislative Budget and Audit Committee presents reports on limited items, such as on professional boards. The respect for and acceptance of the report and recommendations is typical across the political spectrum. It works quite beautifully, actually.

This is what we need now, budget-wide. Independent, objective audits of each and every program, division, department. Along with recommendations for improved effectiveness and efficiencies, we can also root out fraud and abuse. How is this not a good thing?

Surely this is a better way forward than the tug-of-war. It would be much more of a win-win to boot. 

Once we know we’re not spending wastefully, and that we’re spending enough to adequately provide state services, we will have the much-needed budget baseline which can be adjusted annually for inflation. This will give us assurance to address the spending cap that’s over-inflated and outdated in the state constitution; we’ll have confidence that the adjusted cap will be enough but not too much. We will sleep at night knowing we’re not going to sink the next generation.

Very, very importantly: this will also allow us to know if we do need to turn on a new revenue tax spigot. With our very small population, it’s vital to get our budget to the right level. We simply do not have enough people to carry an over-sized budget on our backs. Tax spigots rarely are turned off or down. Starting at a budget baseline that’s too high for our low population and increases that exceed inflation would be harmful for the economy and hard on Alaskans (and undoubtedly spur out-migration from Alaska – resulting in fewer backs to bear the burden).

I’ve spoken about the concept of an objective State Auditor with Alaskans since oil prices dropped. The reception has been warm and welcoming. I think the time is now. If you think so too, please let me, your legislators, and the governor know.

Senator Shelley Hughes represents District F – Chugiak/Palmer.

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  • This makes too much sense. The Permanent Fund has grown too big for the imagination of so many Alaska elected officials who would better represent ignorant voters in a Third World nation.

    With the caliber of this state’s public education over several decades, we need enlightened public officials to inform intellectually disadvantaged voters about what is really going on.

    Thank you for explaining the reality we face in such basic terms, Sen. Hughes.

  • This is great in theory but the liberal left will game the audit and end up winning. The bottom line is that the budget needs to be cut. The amount of money spent on social programs and extraneous govt positions needs to end. The PFD is growing just fine and the people deserve their full dividends. That is the bottom line.

  • Awright, Shelley ! The independent Audits, statewide ! Let’s get the facts on the table !

    Should have been done years ago … And it was you who pointed that out then !

    The Question is, Why weren’t they done before ? And will they be done this time ?

    And how about that Advisory Vote on the PFD ? Would be great to at least let the Voters speak to the issue!

  • I love how things have clarified themselves.
    There are not going to be any new revenue streams and the old streams will get thinner.
    My guess is people will go with more revenue in their pockets now (PFD’s) rather than having that revenue go into the pockets of other people who benefit from various governmental give-away programs, most of which are ineffective if not outright detrimental.

  • I’m in favor of independent forensic audits of every school district in Alaska. Please do start with the Lower Kuskokwim School District.

  • I strongly agree with you Shelley Hughes ! We need audits ! When someone calls each June to get the PFD deposit figure , writes it down each year for decades ; And , all at once starts finding Billions missing from the deposits ; Then spends ten years questioning our state Legislature as to where this money went , ( Not shared with Alaskans ) . There IS a PROBLEM , and THEFT ! 1999-2011 $ 27.3 Billion missing – ” Lazy Mountain Jim “.

  • Spending on what is absolutely necessary and within the purview of government. Great that is what we hired this governor for. If an auditor is the tool he needs to do that job, then do it. What is the hold up?

  • Let’s sum this up with one short sentence: “We need to hire someone to tell us what to do.”

    This is a common political tactic and as disingenuous as it is appealing to politicians who want to be relieved of their responsibility to read, understand and follow the Alaska Constitution (and the U.S. Constitution).

    Politicians love ideas like this one because, when questioned by angry constituents, they can deflect their own responsibility by pointing to the unelected bureaucrats as the undisputed experts.

    We, the people, didn’t elect our representatives so that they could, in their turn, become order takers from yet another new and/or expanded bureaucracy…especially one that is presented to us as unbiased (because, duh, we’d only hire an auditor who had absolutely no preconceived position on the issues).

    Here’s a better idea – every elected member of state government should read our constitution, study it, understand it and then follow it.

    Then they should do their own assessment of all the laws, programs, entitlements, policies, regulations, etc. that have been put in place to determine if these things actually reflect not only the spirit but the letter of the document that Alaskans agreed to be bound by.

    Then our representatives should get to work eliminating everything that fails the constitutional test.

    As an example, where in the U.S. Constitution does it empower government to take property (either by direct seizure or some form of taxation) from productive citizens to give to non-productive citizens?

    Was it the intention of the Founding Fathers to create a government welfare state?

    A plain English reading of the Constitution and other founding documents (Declaration of Independence comes to mind) make it obvious that one of the primary goals that our system of government was set up to achieve was the protection of private property from theft (either by government or more common criminals).

    A social welfare state that is funded with property or money taken from the people is a fundamental violation of our natural right to own and control our own property (unless you are a government set on seizing property based upon some tortured interpretation of the Constitution by the liberal judiciary…just another good example of politicians pointing to the “experts” to justify what they intended all along).

    And for the politicians who are confused by my shift to the U.S. Constitution – all state constitutions and the laws, etc. that flow from them are required to conform to the U.S. Constitution. If the U.S. Constitution forbids government from stealing your property then state constitutions must follow suit.

    So…if our state government recognized our fundamental property rights all social welfare schemes would be struck down as we returned to the legitimate role of government of protecting our real human rights (instead of being the biggest violator of them) and we’d suddenly realize that most, maybe all, of our budget problems had disappeared.

    The truth is that American government is filled with politicians who haven’t a clue or a care about the social contract that we’re all supposed to be adhering to (aka the Constitution).

    No, our politicians simply pander to the special interests that represent the biggest voting blocs and their loyalties ebb and flow as those special interests come and go. They are for sale even if their price is nothing more than your vote.

    • Respectfully disagree…
      .
      Believe we need to hire someone to tell us where the money went, where it is now, and whether officials, elected and unelected, are doing the best with the money they have.
      .
      That someone can’t be funded and controlled by our lobbyist-legislator team.
      .
      Well maybe that someone can… depends on the desired results, one supposes.

  • A bit of relativity: Back in 1998 or 1999, when I served as Sen Phillips Finance Aide, there were about 15,000 State employees. We all knew it was way too many. And oil had just hit $9.80/barrel. A Republican SFin did not, however, want to repeat the mistakes of 1986/7 when the Democrat Legislature and Governor declared “all bets are off” and laid off employees. Their action was blamed for increasing the severity of the State’s recession.
    So the now Republican Legislature chose to hold the line on spending and trim agencies. To “right size” State government.
    Fast forward to last year of Walker administration. A decade of trimming and shaving and we had cut State government down to 23,000 State funded positions (Leg Fin, personal comm).
    That’s right, in government speak, we cut agencies by adding only 8,000 employee positions.
    My numbers are subject to memory. I’d gladly have someone prove I’m wrong. Any Senator/Representative can call Leg Fin and ask for a report on funded State positions over the past decades. (Note: funded positions is the best measure, not total employees, which is a number subject to gaming and not a number Leg Fin can count.)
    To be a little more specific. I worked in DNR back in the 1980’s. There were about 300 to 350 total employees in DNR. And as one of the handful of Mining permitting staff, it was obvious the 5 or 6 of us could stay ahead of the legions in other agencies.
    I asked the commissioner in 2012 how many employees there are, and he said over 900. 3x growth.
    I asked a miner about the permitting process a year or two ago. He noted there are now so many in the mining section, each “needing” to review his permit, that it delayed a modification of his existing permit to the point his funders gave up and withdrew their investment in Alaska.
    I understand the reluctance to cut jobs in this government bound state. But the private sector, outside of oil, can’t pay for it. Look at the Revenue Source Book.
    No broad based tax proposal has brought in more than pennies on the dollar. Not even enough “new” income to cover the State’s fixed expenses, let alone staff.
    So the battle is between those who hope oil production will have a resurgence with Hilcorp at the helm. And we can just spend our way to the day the Chinese build fusion reactors from He3 they harvest from the back side of the moon. Or we can take the hit and actually cut government. Something we’ve not done since the D’s were in charge in the 80’s.
    Sorry, but we don’t need an independent auditor. We need to read the professionally written Leg Fin and Dept of Revenue publications now available to everyone.
    Thanks,
    Bruce

    • You can add on three more employees to run a movie theater for the lower kuskokwim school district.

      The insanity never stops.

  • Hughes must of been absent for the Arduin regime.

    • The elephant in the room when talking about revenue are the Outside interests that take hundreds of millions of dollars from Alaska each year without paying their share. Big Mining, Big Tourism and Big Fishing. We need a state income tax and a much more progressive royalty structure for all our state lands. The proposed Pebble Mine, for instance, would take out hundreds of billions in copper and gold, while paying the state a measly 3%. That’s crazy.

  • Won’t do a damn bit of good unless and until absolutely every person and entity receiving so much as $1 of government money is full audited by a fully independent auditor. Medicaid alone is a black hole of waste and corruption, not to mention native corporations.
    Bottom line, Dunleavy was elected to cut the waste, period. He is attempting to do just that. The anti-Dunleavy crowd are screaming and kicking because he Is cutting the waste from their programs. If the recall is successful, Alaskans better be prepared to grab their ankles, because there will be taxes, there won’t be a PFD, and, as Perot once said, “that giant sucking sound will be the sound of thousands of Alaskans leaving a state that is bankrupt” (paraphrased for the hard of learning).

    • Nice try there Kerry, but Dunleavy was elected because he promised everyone a bunch of PFD money.

  • Shelly,

    Your ideas and dreams are definitely conservative. I applaud you. Those ideas and dreams represent part of a perfect world. Unfortunately, that’s not us. As long as the radical left keeps getting their way, in politics, handouts and, especially, power over all others, there’s not a chance, I’m afraid. To even come close to those honorable goals, conservatives need to step up and vote. That is the key to the entire maze of the un-American, un-Alaskan, unconstitutional, immoral, dishonest, puerile, and downright dirty playbook of the left. The antidote to the left’s assault on Alaska and America must start at the bottom. If you get the base, the rest follows. Citizen voters are that base.

    • Med check time for Mr. Colder.
      Try and engage in genuine analysis instead of spew.

  • Isn’t this in large part what DoA’s new Oversight & Review Unit is doing?

    And I do take a bit of exception to the idea that the legislative audits are particularly valuable. My observation is that the reports on professional boards basically just keep recommending the status quo, and the legislature defers each and every time. So the leg. auditors are paid by the legislature, to recommend that the boards keep doing the same thing, and then the legislature keeps on approving the boards to keep doing the same thing, and keeps funding the auditors. The cycle continues. Hmmmm….

  • Nice, thoughtful column. The author calls for gathering facts, engaging in reasoned discussion and then action — none of which is likely to happen in Alaska.

    We’re pretty much sorted ourselves into various camps. Call them factions, if you desire. None of these factions have the critical mass of skill or will to work together.

    What’s likely to happen in the next six months is obtaining more of the same thing we already have, which to a considerable degree is a dysfunctional political system that will: 1. Fail to put a resolution before the voters next year on how to pay a reasonable PFD,. 2. Adopt an operating budget that is considerably above existing revenues and settled by “borrowing” money from the Constitutional Budget Reserve Account. 3. Fail to address in any meaningful way the roughly $6.5B PERS/TERS debt, a debt of constitutional significance. 4. Fail to see genuine movement towards adopting a constitutional amendment capping annual state spending.

    Along with these failures, we will likely see various tax proposals, including some that may come from the current administration, to enact a statewide sales tax. We will get the adoption of an anemic capital budget that utterly fails to take care of and maintain Alaska’s existing roads and other public infrastructure. And there will be a week or two of hearings on a constitutional amendment that will allow the legislature to kill off any tax legislation proposed by the citizens via the initiative process, a measure much loved by Outside corporate interests but not likely to get traction in the legislature.

    This is a democracy, of course, and the inability of the legislative branch and the administrative branches of government to get public decisions completed in an adult manner is a direct result of who we have elected. The aggregate lack of skill and will among legislators and administrators to do right by all of us goes beyond partisan politics and ideology. Collectively we have elected enough adults to get the job done.
    In other cases individuals have been appointed to administrative positions with insufficient skill to conduct the governance of our state in an adult manner.

    I am glad Senator Hughes authored this thoughtful piece. Thank you. It is testimony to her maturity and willingness to engage by listening and then trying to get something done. Sad to say not much will happen. Alaska is more likely to keep stumbling along, missing opportunities to solve genuine problems and instead keep engaging in sloppy political practices where assigning blame is the name of the game instead of achieving success.

    Oh well …………………………………………………………………….. we get what we deserve here folks.

    • I don’t think you’ve allowed for the chaos thrown into our Legislative mess by the election of this governor. No guarantees of course, but I suspect the culmination of the recall process will see things settle down considerably.
      We do get what we deserve and will have a chance to remedy the latest blunder IMO.

    • Joe,
      As usual, you seem to have the answer to everything. Instead of insulting “state governance”, why not say it like it really is? The state administrators (mostly) are perfectly able and willing to do the jobs handed down by the executive and legislative branches of government. The problem is, there’s so much partisan bickering and nay-saying by the legislative majority to most anything our Governor’s administration does, very little gets done. Can’t be the leftists. Must be incapable state administrators. Put “assigning the blame” where it belongs. Not on the Governor, his people, and his policies. I think your “philosophy” kind of fits with the legislative majority, at least in this instance (and a few more I can think of).

      • Mr. Colder: You attribute “partisan bickering” as the cause for not getting things done. I think this is an overly simplistic and incomplete reason why our state government is way too dysfunctional.
        My overly simplistic and incomplete standard is that we haven’t elected enough adults to the legislature and the administration is not staffed with sufficient adults to get the job done.
        You might say, what is the job? I think the public wants a trimmed down and more efficient government. We need to consolidate and cut government if you evaluate what we have and what we are doing with other state governments around the country. The failure to make obvious cuts and consolidations by the legislature and the governor are obvious and a source of political indignation on the part of many Alaskans. We also need to lock a workable PFD formula into the Alaska Constitution, something that is not being diligently by a majority of Alaskans. Again, the problem is not enough adults in terms of skill and will to get the job done. We also need to deal with the roughly $6.5B PERS/TERS pension obligation. We’re not. Not enough adults tasked with getting job done or capable of working in an adult manner to accomplish what the public needs and deserves.
        This isn’t about partisanship, as you frequently natter on about. There are folks on the right and left (to use that construct), who are infused with partisan zeal for some ideology but lack the skills to work in an adult manner to accomplish something.
        So I predicted a bunch of things that appear to me more likely to happen than not and you didn’t bother at all to address any of my speculation, a phenomenon that suggests you are a partisan. Get real. If you want to get something done, you need to be engaged and act like an adult, which is pretty much what Senator Hughes is saying. It’s not likely to happen because there are too few adults like Hughes around willing to listen, gather facts and then work cooperatively with other adults to accomplish something worthwhile.
        Personally, I am working to put a good PFD formula into our constitution. I’m an advocate for rightsizing our state government via targeted cuts and sensible consolidation. I believe we need a capital budget that includes at least $300M in GF money just to sustain and maintain our existing infrastructure. What are you trying to do? Other than spew?
        What we are likely to get is another somewhat bloated operating budget that uses funds from the CBR to “balance,” no PFD resolution and a short funded capital budget. This will take place among moans about partisanship and recriminations and blame. It’s proof, if you need it, that there are not enough adults in the legislature or the administration. I’m glad Hughes is one of them. I wish there were a few more.

      • It’s about insufficient adults elected and appointed Ben, not partisanship.

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