As the 30th Alaska Legislature begins its second session to approve 2019 operating and capital budgets, we can review state revenues and expenditures well by reading the Empire. In the Dec. 12 Empire, Sen. Shelley Hughes, R-Parmer, carefully explained that claims of double-digit reductions in state spending are false. Changes in operational spending amounted to a 3 percent reduction over the past three years — hardly a reduction at all.
Claims of a 44 percent reduction over five years and 27 percent over three years were made by Gov. Bill Walker’s OMB Director and Revenue Commissioner in the Dec. 14 Empire, accompanied by plenty of abjuration. To show later years as having less spending they included earlier year oil tax credits with expenditures. Changing income from General Fund to fee increases and other sources allowed claiming reductions without reducing spending. Scheduled debt service reduction was claimed as reduced operations and supplementals became a shell game. Counting both spending of bond proceeds and debt service is double-counting of earlier expenditures. Counting departures from the PFD formula is not reducing the cost of state government. Adjusting for these misstatements affirms the Senator Hughes numbers.
Actual reductions of 27 percent or 44 percent would have brought lay-offs but there has been none. Moreover the state remains in the missile launching business, the railroad business, the home mortgage business, the rental housing business, the campground business, the marine freight business, the student loan business, and on and on; real dollar spending cuts would have reduced the size of government.
In its Dec. 15 review of the 2019 budget released that day, the Empire reported that Walker proposed a $400 million increase over the current year and a simultaneous, retroactive increase of $700 million for the current year, a total of $1.1 billion. Increasing current year spending now, at the end of the fiscal year, is dishonest in two ways. It humbugs the claims that the 2018 spending was a decrease, and it hides a huge part of the 2019 increase.
In the Dec. 19 Empire, Sen. Mike Dunleavy, R-Wasilla, (since resigned to run for governor) examined the Revenue Department income forecast which undershot oil production in predicting declines instead of the increases that actually occurred. The forecasts also materially underestimated prices, inflating the deficit to suit executive branch claims. At the moment the difference between expected revenues and probable expenditures for the coming fiscal year reveals a one-time need for $2.6 billion. The main savings account, the Constitutional Budget Reserve had $3.1 billion on Dec. 27, enough to cover the shortfall with one-half billion to spare. Honest reductions rather than persistent year over year spending increases would allow the $3.1 billion to last five years or longer.
The Walker administration has misstated expenditures and under-forecasted income to defend PFD reductions and demands to tax working Alaskans. The fact is that amounts taken out of the PFD remains invested, increasing the PFD amount available if appropriated and not vetoed. Now Walker is proposing huge spending increases even as he intends to again reduce the formulaic PFD by more than half, and again demands to tax working Alaskans. He wrote in the Dec. 22 Empire that he must do this to put Alaskans back to work, and make us “safer, stronger, smarter,” but one fellow said that “protecting” the PFD by halving it, and taxing private sector workers on their earnings while increasing state government at this point in Alaska history begs for universal drug testing in the Capitol. Taxing workers to put them back to work? Make us smarter?
So it’s no surprise that Walker has presided over more credit rating downgrades than all previous Alaska governors combined. The Walker recession is the longest in Alaska history. With the highest unemployment in the U.S., we may soon have for the first time unemployment twice the national rate. Yet cash reserves are sufficient to fund operations without using the permanent fund or giving the PFD a third haircut! Walker avoids making decisions he said he would quickly make if elected even as he increases the risk to our economy, holds the PFD hostage, and demands taxes from working families, and only Alaska workers, to pay for an ever-expanding government.
• Tomas Boutin is a retired forester. He and his wife moved to Juneau from Haines in 1982, and they have lived here ever since.
