If you believe Rep. Lora Reinbold, R-Eagle River, “little progress has been made on real cost reductions” to the state’s operating budget. She thinks there’s another $1 billion in cuts that should be made this year. How would that impact the state’s economy? In Reinbold’s world, not much. She seems to believe the government and private sector are only minimally connected.
“When we talk about the cost of government,” she wrote in a My Turn published in the Empire March 30, “shouldn’t we talk about the total operating cost?” and “balance total expenditures against your total income?”
Of course. But we should we also discuss where that money comes from.
The first note, at the bottom of the Kaiser Family Foundation table she cited, states federal funds are included in its per capita state spending numbers. So let’s talk about how the federal government contributes to her complaint that our state government spends “nearly three times the national average.”
Alaskans easily get more federal aid than other state. And I’m not referring to the direct funding of the Defense Department and its smaller agencies. This is money that goes directly into the state’s budget which, according the most recent data published by the U.S. Census Bureau, is two and a half times the national per capita average.
That’s not the only way she mischaracterizes the issue. Just as Alaska is overly reliant on the feds, cities here look up to the state to fund a significantly larger portion of public services than anywhere else.
In funding public education, for example, Illinois local communities contribute three times the amount they the get from state government. In New York, it’s six times more. But here in Alaska, local governments put up only 50 percent more than that state does.
Another example is road construction and maintenance. Here in Juneau the state recently spent $3 million on road and bridges to Amalga Harbor and another $600,000 on Fritz Cove Road. In any other state the local government would have picked up the tab for dead-end roads used only by local traffic.
So by citing the Kaiser figures as proof that “our state government is demonstrably too big and too costly,” Reinbold’s argument is oversimplified and misleading. The more complete story might be that government budgets at all levels are unsustainable.
However, before making that conclusion, there would still have to be a discussion about whether taxpayers are adequately funding the services we expect.
According to Forbes, Alaska has the lowest state and local tax burden in the nation. And since we’re on top at the receiving end, that makes us the biggest collective freeloaders in America.
Still, Reinbold wants to use 2006 as benchmark and reduce the cost of delivering government services to $7.2 billion — $1 billion less than the budgets proposed by Gov. Bill Walker and both houses — before she’ll support new taxes or restructuring the Permanent Fund. Fortunately, she hasn’t got any serious support for that position.
On the other hand, as co-chair of the Senate Finance Committee, Sen. Pete Kelly, R-Fairbanks, has been singing a similar tune throughout the session. He’s got no firm target for reductions. But in an underhanded way he’s tried to pass some of the taxing responsibility to local jurisdictions.
SB 210, submitted by his committee, is awaiting the governor’s signature. But it’s now without the original language which would have allowed communities to eliminate the property tax exemption for seniors. Putting that on the table is a sly way of making other politicians suffer the public ire when taxes are raised.
A similar trick was tried by the other Finance Committee co-chair last year. Sen. Anna MacKinnon, R-Anchorage, proposed redirecting the cruise ship head tax from local bank accounts the state treasury. That would be like the Congress taking a piece of Alaska’s oil tax revenue (when we had some) to offset their budget deficit and asking our legislature to generate new to revenue to replace it.
All three legislators see the budget gap only in terms of funding big government by robbing wealth from the private sector. But it’s not a simple either/or debate. The fiscal health of our government, businesses and all Alaskans is intrinsically tied to one another. And unfortunately our state is so broke that either state or local governments will be forced to raise taxes to finance the services Alaskans want.
• Rich Moniak is a Juneau resident and retired civil engineer with more than 25 years of experience working in the public sector.
