Opinion: What Alaska’s budget really needs is a tightened spending cap

Opinion: What Alaska’s budget really needs is a tightened spending cap

There is one remedy that should be given special attention.

  • By Ryan McKee
  • Tuesday, August 6, 2019 7:00am
  • Opinion

The debate over the state budget continues. As the discussion drags on, and proposed solutions are debated, there is one remedy that should be given special attention: a tightened spending cap.

The budget has proven itself to be a contentious issue, heightened by Gov. Mike Dunleavy’s recent 182 line-item vetoes of the budget, which accounted for $444 million in cuts. While many are displeased with these cutbacks, there can be no denying that the governor was faced with an extremely difficult task. And when it comes to the budget, any semblance of restrained spending is a step in the right direction. Even with these cuts, however, the deficit still sits at about $1.2 billion, down from $1.6 billion, showing that further solutions must be sought to truly fix the problem.

Unfortunately, no matter how the budget is cut this year, it won’t do much to address the issue of spending in the future. And without a tightened cap to rein in government spending, this same debacle is sure to recur every year.

For too long, the state has relied on the Constitutional Budget Reserve (CBR) as the state’s main piggy bank, using it to cover short-term deficits and encourage further spending. Should the legislature continue using the CBR in predicaments like this, our rainy-day fund will be drained to less than $1 billion. Some expect the remaining CBR amount to last for only two more years because the state has routinely pulled money out to help cover its deficit and support its spending addiction.

A tightened spending cap would go a long way toward easing this crunch.

According to new research conducted by the Alaska State Chamber of Commerce, 61 percent of Alaskans support a constitutionally mandated spending cap. In 1982, Alaskans overwhelmingly backed a constitutional spending cap. But that amendment did not cap expenditures for capital projects or certain other appropriations. As a result, many thought it didn’t go far enough to limit state spending. Flash forward a few decades and this fear has been confirmed.

The constitutional amendment passed in the 1980s set a base spending level of $2.5 billion. That amount has since grown to$10.5 billion. Pat Pitney, former Gov. Bill Walker’s budget director, commented that “the constitutional spending limit was so high that it wasn’t even looked at, even in the highest of spending years, in 2011, 2012, 2013.”

Earlier this year, Dunleavy proposed and supported passage of SJR 6, which would limit state spending to the average of the budgets passed in the previous three-year period, allowing for adjustments to accommodate inflation and population growth. The proposal would have also capped any growth at two percent overall. While the legislation was not enacted, it was a worthy first attempt at tightening the state’s loose spending cap.

As Dunleavy has said about the cuts, “Over the past several years we have used [$14 billion] from our savings to subsidize the government. This situation, everyone agrees, is not sustainable.”

To begin to fix Alaska’s budgetary issues, we need a spending cap that will place real restraints on out of control spending and promote economic prosperity for all Alaskans.


• Ryan McKee is Alaska’s state director for Americans for Prosperity.


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