Just because Tomas Boutin, a Juneau resident who wrote a My Turn on Jan. 19 titled “Walker recession is longest in Alaska history,” blames our state’s recession on one man doesn’t mean it’s true.
The facts are plain and simple — oil prices crashed after Gov. Bill Walker was elected. He inherited a bloated budget, the result of former “conservative” governors and a “conservative” super majority’s massive spending spree for more than a decade. For the past three years, Walker has proposed reasonable, sustainable budget solutions. But the Alaska Legislature has never had the guts to hammer out a complete fiscal plan that would get us out of this fix.
Let’s review Boutin’s assertions with facts:
Changes in operational spending amounted to a 3 percent reduction over the past three years: False. Operating Agency reductions of $752.2 million unrestricted general funds are down 17 percent from Fiscal Year 2015 to Fiscal Year 2018. These figures represent one of the four categories of funding that the state receives, unrestricted general funds. These are the focus of most comparisons because it is the category of funding that hits the state treasury. The other three categories of revenue are restricted in use and money saved in those categories cannot necessarily go towards reducing the deficit. Bottom line: reduction has been dramatic and continuous over three years.
Agencies are only down 4.6 percent 2015-2018 when looking at all funds: True. As a part of the drive to reduce state spending, the Walker Administration has continued leveraging as many federal dollars as possible to make sure state programs and departments can function at optimal levels. Bottom line: thanks to Medicaid expansion and reform, the state has received more than $500 million in federal reimbursement dollars and over 40,000 more Alaskans now have access to health care.
Reductions in the number of state employees. There were 3,000 fewer state government employees in November 2017 than the same month in 2014, the year state government employment peaked. Over this period, Alaska’s population has grown 15 percent. Bottom line: state government employment is at its lowest level in since 2002.
Boutin states that 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.” Except for the Alaska Marine Highway System, a vital connector for local businesses and communities, these corporations all make money and none of them use any general funds. Bottom line: Why would we divest in a government services that brings jobs, tourists, economic developmen, and tax revenue (Motor Fuels tax and local sales tax) into the state?
Boutin says Walker proposed huge spending increases and reduced the formulaic PFD by more than half: False. Walker proposed a 7.7 percent increase to the PFD this year — $1,216 per every qualified Alaskan. A full dividend and no use of PFD earnings for government would mean it would take either a 15 percent statewide sales tax or an income tax equal to 74.2 percent of federal tax to fill this gap. Bottom line: Saving the PFD in the long-term means doing exactly what Walker had the courage to do.
Boutin says, “cash reserves are sufficient to fund operations without using the permanent fund or giving the PFD a third haircut!” False. Alaska is out of reserves near the end of FY 2019. Alaskans should be conservative in estimating our reserves. Even if oil jumped to $85/bbl and stayed there all year, we would still have to draw $1.3 billion from the fund this year. Even aggressive price assumptions show empty reserves soon. Bottom line: We are playing a fool’s game if we rely on a dwindling piggy bank.
Walker has taken far more courageous actions to protect the future of the Alaska Permanent Fund and right size government than either the House or the Senate. Alaskans should tell legislators the blame game is a loser’s game. Bottom line: the recession must end this year. Let’s put partisan politics behind us and hammer out a solution that will put Alaska on firmer economic ground.
• Jeff Sloss is a 38-year Juneau resident.
