Tough decisions ahead for state budgets

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By SENATOR LORA REINBOLD

State government remains too big, and too expensive; we are faced with tough choices.

Government needs to make the tough decisions to reduce spending to a sustainable level, to promote a strong private sector economy, which creates jobs for a more stable future in Alaska.

Alaska remains at the top of the nation, #1 in spending per capita, and spends 2.3 times the national average on state government, according to the Kaiser Foundation. I have said for years: Fix government first, before you take the Permanent Fund dividend, and before you tax Alaskans. 

There have been many claims of “deep budget cuts” but the data shows a different story. In fact, the Governor and Legislature have made little progress reducing State spending. The chart below shows spending for the past 5 years for the State Operating budget, the Capital budget and PFDs. Alaska’s Operating budget, including both Agency and Statewide Operations (debt service, retirement, etc.) has increased to $9.2 Billion dollars, in total funds, for FY 2020. During the same period, Capital budgets and PFDs have been reduced. Research has shown reducing Capital budgets and the PFD has the most negative impacts on the economy.

What drives Alaska’s big budgets? Simply put: Too many programs, too many employees, and too many special interests with their hands out, coupled with the governors’ & legislators’ inability to say no. Alaska has one of the highest rates of public employees in the nation, working 37.5 hours a week with healthy union contracts and automatic annual pay increases.

Rural Alaska depends heavily on state funding, with virtually no local tax base to support their communities. Health and Social Services is the largest budget, approaching $3.5 Billion annually, with almost 250,000 Alaskans on the public health system.

Unlike other states, Alaska’s budget is controlled by a few members in legislative leadership using a system of rewards and punishments, and a “binding caucus rule,” where they require legislators to pledge their vote to a budget, before it is constructed.

As an example of the punishment by leadership, I was stripped of the Labor and Commerce chairmanship for voting against a bill that reduced the Permanent Fund dividend and increased the budget.

The chairmanship was given to union loyalist, Sen. Click Bishop and two of my committee assignments were rewarded to newly appointed Sen. Josh Revak, a caucus loyalist.

In addition, lobbyists and special interests drive the budget up and thrive in Juneau’s isolated environment.

State savings accounts are being drained. Since Fiscal Year 2013, government has spent almost $20 billion from the Constitutional Budget Reserve and the Statutory Budget Reserve, leaving these accounts almost empty.

In addition, almost $6 billion has been spent from the Permanent Fund Earnings Reserve on state government. Traditionally, this fund was only used to payout PFDs and inflation proof the Permanent Fund.

Since 2018, the Legislature and governors have been using the Earnings Reserve Account to fund state government, at the expense of the PFD program. Continuing on the path of big government is the greatest threat to the PFD program, and has pulled billions of dollars out of the private sector economy. For years, I have voted no on unsustainable budgets. I warned against using the Permanent Fund Earnings in a 2016 op-ed, “Budget Cuts are Missing, Don’t Touch the Permanent Fund.”

The data tells a compelling story that Alaska has a spending problem. What are some potential solutions?

  • After conducting audits, the State Legislature and governor must eliminate poor performing programs and prioritize programs based on constitutional requirements.
  • Move the Legislature to the road system, where there is greater access and accountability.
  • Dwindling state funds should be appropriated only to programs with the best outcomes and strict accountability.
  • The binding caucus rule must be abolished, as it is often used to coerce legislators to vote for leaderships priorities.
  • A spending cap must be established.
  • Everyone must realize there is no such thing as a “government funded” program; the private sector ultimately pays the bills. 

Alaska’s economy is fragile, especially during the COVID-19 crisis; the private sector should not be burdened unnecessarily with additional taxes to sustain big government. Dependency on state dollars must be discouraged.

My allegiance to the Founding Father’s principles, sound economic practices and keeping my promises to the people in my district, will always be stronger than any allegiance to a caucus. It’s time to talk to your legislator and the governor, as they need your encouragement and support to reduce government spending.

Born and raised in Alaska, Republican Sen. Lora Reinbord serves Eagle River, Chugiak & JBER, and is a former State House representative for Eagle River, 2013-18.

70 COMMENTS

  1. She is right on in all respects. We need an email list of all our legislators. It’s time to blitz them now. The decline of oil and tourism employment figures alone indicate that we are heading for a true income versus expense debacle never seen before. Our bloated state government cannot, and should not, be sustained.

    • Every legislator’s email address, in fact, every State employee’s address is easily available on the State’s website. If you don’t know that, I question the value of your opinion.

      • Nice! I would point out that ignorance is cured with appropriate information. You supplied that info.. great. But being a jerk can become a chronic state. I would caution you about your level jerkness!

    • I believe [email protected] that is (all legislators a then three L’s) is the group email list for all legislators, if not then it would be [email protected] or senator.firstname.lastname.akleg.gov
      .
      I send emails every year, multiple times per year, requesting that they cut spending to no avail. Our state is going to be in a world of hurt in short order because these elected representatives refuse to do the responsible thing and cut spending.
      .
      North Slope oil was selling below $17 per barrel this week. The budget was based on it selling higher than $60 per barrel.

    • The binding Caucus isn’t the problem. If Sen Reinbold and others with a similar POV were in leadership, would you still think it is a bad idea? Hardly.

      Perhaps the problem in the legislature can be easily be identified by looking in the mirror. We’re the ones that elected them….

  2. Why is this so hard for the rest of the clowns she works with to see? At what point do they understand we have got to cut the government bloat?

  4. Thank you Lora!
    Alaskans statewide need to band together to take back our state. Republicans, please mount primary challenges to every Republican turncoat so we can replace them. Support only candidates who will cut down the size of state government to what we can afford, and restore the full PFD payment as required by law. It’s not too late. The vote to take back our Alaska is August 18.

  5. Senator Reinbold’s clearly stated and understandable letter should be printed and framed! Her six bulleted items , especially, are our guidelines.

    My recommendation to Alaskans is: Print multiple copies of Sen Reinbold’s letter, post it, memorize it, forward this letter all over the state, and get to work persuading our legislators to solve Alaska’s problems. This letter also serves as agendas for Citizens’ Group discussions, now that we know what we’re talking about. “We’re all in this together” The death of Alaska is a more ominous threat than the Wuhan virus. Without a fix to Alaska’s economic problems, the whole state dies!

    One more thing….vote out the Reps and Senators who are hamstringing progress.

    Thank you Senator Reinbold.

  6. Excellent analysis Lora. I’m grateful for your willingness and courage to tell it like it is. I remember a phone call I’d made to Sen. Click Bishop’s office late last year before the special session had run out. My beef was he’d promised one thing and did a 180 on it. His aide whose name I remember as “Chris” (you know who you are!) was nice until I asked the question, “How is it that the Sen. claimed he was for the PFD and now he’s not?” Chris then barked at me and told me, “Times change and he’s in favor of going with the times.” Well, I knew from that point on, it was fruitless to continue to get an honest answer. I responded with, ” I’ll never vote for Click again and will make sure I do everything in my power to support who ever runs against him.” I guess I got the answer with a loud “Click!”
    I just hope and pray everyone who’s dissatisfied with their Sen. or Rep. lets them know of their dissatisfaction. Vote them out!

      • Yes Lora, You are right. We need to get beyond not plowing snow, closing state parks, laying off troopers and eliminating those “woe is me”, “you are killing me”, VACANT POSITIONS!!! They showed us! We must get down to some real cost benefit analysis. We always talked about the rainy day. It’s here.

  7. I think the ‘solution’ to the budget dilemma is to fund only “essential” services (not like the ‘stay-home pleas/orders on “essential” businesses, excepting pot, liquor stores and pawn shops), determined not by one power hungry liberal and cronies, but a consensus of Alaskans. Our ‘wonderful’ politicians will break the state, the PFD, every $$ source, for their inane spending, with little or no income for the immediate future, at best. Guess what then. Taxes to the moon, Alice. Constitutionally guaranteed rights and freedoms ignored. No jobs. No source of income except the “free” gov’t dole. The American/Alaskan dream is being chased away by liberal politicians to the point of extinction. It will get much worse before November. We merely need to engage our memories of this critical time for us before we put the x in the box by any name with a big “D” associated.

  8. Excellent summation of the situation!! My hat is of to you Suzanne for publishing this superb article from Sen Reinbold!! Having been up here since 1983 and having suffered thru the recession of the 80s, I derive some satisfaction in now being retired with a secure income and so far untouched by financial difficulty I. Still recognize that many Alaskans are where I was in the eighties- with virtually no income but yet with bills to pay!! But in addition to this dilemma , our state persists in a financial disasterous manner. I wonder where things will go in the future!!

  11. We can no longer afford to fund a government in Juneau. 100% of this could be taken care of online. That would save huge rental/etc. in Juneau…..per-diem, airfare, etc., etc. etc. It’s crazy to have Alaska’s government in such a remote and expensive place. That would free up a huge amount of revenue and guarantee better control and accountability.

    • If you think having the government in Juneau is a huge drain on the budget, you obviously aren’t aware of the problem. Do your homework about the real cost of things, and you might want to see Kerry Williams below.

      • Thank you Senator Reinbold for your consistency of making promises to your constituents and keeping them in Juneau. Thank you Suzanne for sharing this with all Alaskans when other media turns a blind eye, you are vital, and valued.

    • Next, you’ll be wanting to quarantine our entire lobbyist-legislator team in their homes, forcing them to telecommute!
      .
      Kind of brilliant when you think about it…

  12. Cut the government bloat, cut all the wasteful spending, cut teachers’ wages, cut all the useless bureaucrats (doesn’t Ms. Reinbold realize she could cut every single employee of the state and still not balance the budget), the same old tired pap from a Valley legislator, which we have heard over and over year after year.
    So, Lora, how about some details? What specifically would you cut, how much would it save, what would be its consequences? How about doing what you are supposed to be doing, figuring out how to get us out of this mess instead of complaining that things aren’t going your way because other legislators are ganging up on you. It’s time to get to work instead of whining.

    • Saul Alinsky’s Rules for Radicals #5- “Ridicule is man’s most potent weapon.”
      Are you familiar with this rule, Greg, or does ridicule just come naturally? Or are you paid?

      • I prefer to call it accountability, something Lora has avoided with calls for cutting the state budget without giving us any specifics other than it will make government smaller.
        Do you think it is good to be able to drown the state government in a bathtub? Then, who would be running the state? Big business? The oil companies…oops, perhaps they already are…how’s that working out?
        It’s easy to say the budget needs to be cut. It’s difficult to figure out a way to do it without throwing the baby out with the bathtub water.

        • Why do liberals and progressives always suffer from paralysis by analysis so horribly? Cut the budget man, all of it, we don’t have the money…what part don’t you get about our main source of income is selling at less than $20 per barrel and our budget is based on that same barrel selling above $60. I guess math and liberal progressives just don’t add up.
          .
          You want specifics to cut, let’s start with 20% of everything right now. A month from now we will cut another 20% of everything. If we are still staring at oblivion at that point let’s cut 40%. Is that specific enough?
          .
          You obviously do not grasp the situation we are in. There is no baby and the bath water has dried up…that’s the situation we are in. We need to cut now and cut deep if we want a government in a decade.

          • You do understand that some things are of a higher priority than others, don’t you?
            You do understand that the consequences of cutting funding for roads, or police protection, or mental health…forget that, it’s already been cut below any meaningful amount…or, say, airport operations, likely cannot survive 20% cuts without significant deterioration of service.
            Do you believe that you should have to give a valid credit card number before the fire department should have to come to your house to put out your fire? Or the police?
            I’m thinking you do not grasp the situation.
            Please, tell me how this would work in your world.

          • My police and fire aren’t paid for by the state, my property tax pays for those services.
            .
            And I agree there is a thing called priorities, we should cut everything 20% right now and cut some things 100%. There are always consequences when cutting funding, the biggest consequence of not cutting is there is no more money and everything gets cut anyways.

    • The cupboards bare. The gasline to nowhere director only makes 700 and something k! Maybe we can launch him into space from that rocket base!

    • Let’s start with the governor’s contracts with friends, say Clark Penny to start. Well, that one’s gone, but what about the ones we need to look out for in the future? I’m in on those.
      You might want to look at AIDEA, as well; privatize profit, socialize debt.

  13. Great piece but nothing new. If the voters in the districts where these slimeballs live don’t vote them out? Then the rest of us are stuck with them, and even more so, they are emboldened. The fact the people in these districts haven’t risen up after this most recent complete abandonment and really overt resentment, of their constituents, tells you that more than likely they are fine with it and these folks will be there again next session. It’s sad, but if the voters won’t grow a backbone then it’s sort of hard to ask some of these legislators to— which is why, incidentally, it appears some of the governors cuts had to be reduced last year—And probably why there were less this year—because the backbones of the few legislators that were with him, were only “so” strong. Without moving back, I doubt the cuts he kept would have survived an override.

  14. Dang it! Most of us wanted the State Budgets to be cut down to a reasonable size, but the graphs really show that it has not been done. What is it that our legislators do not understand about we have NO MONEY to fund government going forward. Question each person who is running for office this year- How are they going to CUT Alaska Government- We will not survive without real cuts.

  17. Thanks, Lora! As always, you are looking out for our future, not just the party-hearty here and now. We will sooner or later have a hell of a hangover unless we deal with reality now.

    • Pat – thank you I agree it’s been no party for me trying to hold back spending year after year. I wanted to title the article spending today at the expense of tomorrow, because we’re running out of $$$- its get be rough times ahead!

  18. Funny how Lora never mentioned our biggest treasury drain, the more than $1,000,000,000 tax write-offs we give to help outside and foreign producers to strip us of our oil. Nor the billions we’ve given in direct subsidies to them. All so we can keep thousands of our-of-state workers working.

    Instead she wants to fire as many Alaskans as she can from state jobs.

    Smh

  19. Just a bit of fun….for the record, Art Chance always posts significantly intelligent information. Never met him, but if ART CHANCE is the byline, I listen! Always, Art Chance, thank you for your touch of class. Been in Alaska 50 years. I suffered deprivation until Suzanne Downing came along. I am getting to KNOW some of my fellow Alaskans!

  20. “The chairmanship was given to union loyalist, Sen. Click Bishop and two of my committee assignments were rewarded to newly appointed Sen. Josh Revak, a caucus loyalist.”
    .
    Bishop’s probably a lost cause, but don’t fault ole Josh for being a loyalist. Sure Josh helped stiff his constituents with a brand new fuel tax before the paint was dry on his office door.
    .
    But put yourself in Josh’s place (please don’t, actually!) what happens when you’re new kid on the block, all starry-eyed ready to Get Money for those who installed you, then Peoples Imperial State Senate President and Co-Governor Giessel tells you to jump
    .
    … and you realize you don’t have what it takes to do anything except ask how high?
    .
    Well, thank God you’re not like that, Senator Reinbold.
    .
    One hopes you and your colleagues are working diligently to unseat, depose if you will, Peoples Imperial State Senate President and Co-Governor Giessel and are making a reasonably noble attempt to salvage Peoples Junior Senator Revak from the mess he’s made for himself
    .
    …assuming he is salvageable.
    .
    Thanks for being there, Senator Reinbold. Please keep us updated as only you can.

  22. They all have businesses or nonprofits that benefit from State spending…if they don’t, their spouse does.

  23. Why not start by cutting Legislative Affairs Budget? Staff, Office allowance?
    You can do this yourself Senator.

    • That’s chump change; the total budget of the Legislature is several places to the right of the decimal point in the rounding error of the DHSS budget.

      • Art, Chump Change or not, it sets a tone. Not unlike the U.S.M.C. and its fire discipline . You don’t waste your ammo, first off because you will need it later and secondly it gives away your position. I would suggest that the senator has a position here, a big staff and office that senators never had before oil $.

      • Well said, Mr. Chance. A nice dose of reality.
        I disagree with you on many points, but you present arguments that are not without merit.

  25. I wasn’t far enough up the org chart to be a decision-maker in the mid-Eighties but I was far up enough to be in the room and doing staff work for the decision-makers. If your name is on the door, you have to reconcile Operating Budget cuts with the fact that every cut in the Personal Services budget means a house is going to be foreclosed on, an apartment is going to be vacant, a car is going to be repossessed, and a family is going on welfare until they accept the inevitable and pack up and move South to look for work.

    The Alaska economy is a lot different today from that of now almost forty years ago. Back then there was very much an Alaska based private sector. Today, it is almost entirely corporate except for some niche businesses. Frankly, the corporations don’t really give a damn about Alaska, and their management doesn’t understand it; they only care about the numbers. They have no interest in Alaska politics unless you want to tax or regulate them.

    In the Cowper Administration we caught Hell from Alaska private sector interests because the Administration and the Legislature dealt with revenue losses by cutting the Capital Budget and putting the private sector on the bench. Only a few hundred State employees paid from the operating budget were laid off, and most of those were constructive discharges in which the budget was used as an excuse to get rid of somebody they were too chicken to get rid of for cause.

    We’ve basically done that again; as the Senator points out, such cuts as there have been have been in the Capital Budget, which almost exclusively impacts the private sector. The latest budget increases the Operating Budget by $300MM to pay for effin’ raises mostly; who other than State employees is getting a raise? The people who bought a Legislature, the union racket, the education racket, and the healthcare racket are getting the raises. The rest of Alaska is getting hind teat.

    • Seems like something so corrupt and mismanaged should have an Achilles heel…
      .
      Any idea(s) what it might be… how to exploit it?

    • Art, you mostly have me here, except for the part about workers, and teachers, and healthcare providers being a racket. I’d rather like to keep them doing what they do.
      I don’t particularly like ratty roads, which are increasingly common and whose repair is mostly done by private companies, and I don’t particularly like kids who can’t read or, especially, think critically, and I don’t particularly like the absence of decent health care for those who are at risk of, say, the corona virus.
      And, despite evidence to the contrary, I don’t particularly like run on sentences.
      But, I do take you major premise about corporations.

      • Issue’s not necessarily workers, teachers, healthcare providers being themselves a racket, though from listening to some of them, one wonders whether culling the herd might benefit productive Alaskans and the herd.
        .
        Issue’s the emergence and public acceptance of what may be perceived as Alaska’s very own La Cosa Nostra, unified union-political familias generationally obsessed with acquiring –and keeping– control of their individual rackets.
        .
        No? One need only refer to Alaska’s Lobbyist Directory to see how big the other half of our lobbyist-legislator team is, and how much money investors pay lobbyists to buy and lease legislators.
        .
        Ever wonder how “ratty roads, which are increasingly common” got started, how contractors get away with it, how such things apparently passed DOT inspection, hether federal funds might have got accidentally misused in the process, why apparently nobody dares blow the whistle to the feds?
        .
        No? Why then has the Ratty Road syndrome been been allowed to go on so long?
        .
        Corporations only do what they do because Alaska’s state and local agencies are okay with what they do, yes?
        .
        No? Look at the Denali Commission, a pipeline of endless money flowing from the U.S. Treasury directly to Alaska.
        .
        Meet the Commissioners: Alaska Department of Labor and Workforce Development Commissioner, Associated General Contractors of Alaska Executive Director, Alaska Federation of Natives President, Alaska Municipal League Executive Director, University of Alaska President, and… Alaska AFL-CIO Executive President;
        .
        … think about how these Commissioners co-exist, thrive, profit, complain about shrinking state budgets while guzzling federal money
        .
        … then you may want to form your own opinion about corporations who still have to make money by doing business in this (expl del) environment.
        .
        Bottom line is you have a good point; what might happen if Alaskan workers, teachers, healthcare providers, road builders were no longer controlled by their respective Familias, but instead represented by reasonably honest elected officials?
        .
        What’s the next step?

  26. Art Chance…to the gut of Alaska’s expenses and therefore who owns certain members of our Legislature…
    Please list the Unions active in Alaska. (BTW…. Abraham Lincoln’s Civil War began the National Debt, and we’re still paying for it.)

    Our influential Alaska Unions?

    A. NEA?
    B.
    C.
    d
    E.
    F.

  27. The budget needs to be cut immediately. Oil was selling below $20 per barrel this last week, but it was built on oil being more than $60 per barrel. Cutting the budget by a paltry 20% during these times isn’t draconian, it’s logical. A month from now we can address the situation and see if we need to cut another 20%. The budget must be cut and not with a scalpel but with a huge axe at this point, since this legislature and previous legislatures have spent more time kicking the can than doing the job they wanted to do.

    • Cut with an ax? How about a hand here, a hand there, maybe a p—-? oops, please, not that!…how about, let’s see…the head?
      Steve-O, you’re right about kicking the can. Now the hard part starts. How do we salvage a state so that it doesn’t end up being a poor example of a third world country?

      • We preserve capital, the way we do that is broad across the board cuts and stop spending ourselves into being a third world country.

      • Greg,

        Do you want a barrel of oil and $37, they are giving it away. Time to cut, and cut, and cut, and cut. An axe might not be enough at this point.

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