Alaska Dispatch News - Alaskans, Cuts Alone Won't Balance our Books

Op-Ed

By Gov. Bill Walker

Alaskans, we have a deficit of more than $3 billion, and without a plan we'll burn through the savings in our budget reserve in less than two years.

That's why I put forward a plan to stabilize the budget -- and protect our economy -- for the long term. My plan calls for a combination of spending reductions, sustainable use of Alaska Permanent Fund earnings, modest tax increases and oil and gas tax credit reform. Not a single one of these actions is easy or popular. But doing nothing is far worse.

As I travel the state talking to Alaskans, many thank me for putting the state ahead of personal political gain. I also hear from those who say we need to cut first. I take that input very seriously. I want to explain the budget cuts we've made, and why cuts alone are not a workable solution to this crisis.

First, what we've done. Senate Finance Co-chair Pete Kelly told the press in April my budget got legislators off to a good start with $132 million in cuts. The Legislature cut an additional $318 million, but did not include any significant new revenues. I, therefore, cut another $596 million in unrestricted general fund spending using my line-item veto.

All told, over the past four years unrestricted general fund spending has dropped 44 percent, according to the nonpartisan Legislative Finance Division.

That's a huge drop, and it was necessary. More cuts are needed. But there is a limit to what can be cut.

The capital budget has been reduced by 95 percent in the past four years. The capital budget pays for things like new roads, buildings and ferries, as well as maintenance and repair of existing ones.

When you own a house, once in a while you have to service the boiler, repair the roof, and paint the exterior. Otherwise you lose your investment and eventually your home becomes unlivable. It's no different with state-owned buildings, roads and boats.

But, many Alaskans say, our state spends more per resident than most other states. True. Here are four key reasons why:

In Alaska the state provides many services that local governments provide elsewhere. These include child support collections, supplemental school funding, measurement standards, transportation planning, and the medical examiner's office. With the exception of a few urban areas, Alaska communities don't have the population or industry base to generate enough revenue to provide these services.

Alaska is the only state that pays residents an annual dividend. I support the dividend program, but the cost adds to our per-capita spending.

The cost of doing business is higher in Alaska than Outside. Fuel, salaries, health insurance and other costs are all higher here.

Finally, our state's vast size, coupled with sparse population, means we have a higher infrastructure burden. For example, Alaska operates 247 airports compared to 5 owned by Delaware.

Cutting enough to live within the $1.2 billion we expect to earn next year is virtually impossible.

It would require spending just 16 percent of what we spent two years ago. We could fund K-12 education and that would be it. No troopers, prisons, plows --- nothing else.

Put another way, we could lay off every state worker paid with unrestricted general funds. That would save $1.1 billion. We'd still need to find more than $1 billion in cuts.

Cuts can't be the only solution. Taxes alone are not the only solution.

We can hope oil prices and production rise. And believe me, I do. But even the best-case scenario isn't going to save us this time. With modest increases in production and oil at an optimistic $60 a barrel, we would generate only $1.9 billion -- not enough revenue to cover basic public services.

I love this state. I want us to continue to be able to manage the world's greatest fisheries. I want to continue to be able to educate our children, protect the most vulnerable among us, and provide the infrastructure and fiscal stability needed for industry and communities to thrive.

That's why I can't sit back and whistle past the graveyard.

Many Alaskans ask me who they should vote for in the upcoming primary on Tuesday, Aug. 16. That's your decision. I have not endorsed, contributed to, or ghost-hosted fundraisers for any candidate.

But I encourage you to ask each candidate: "What's your plan to fix the $3 billion deficit on a sustainable basis? What will you do to make sure Alaskans never revisit the fiscal crisis facing us today?"

Election sound-bites hurt more than they help. Cuts alone won't do it. It's time for legislators to step up and do what's right for Alaska.

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