Legislative Finality

By Cindy Spanyers, APEA/AFT Legislative Liasion

The legislature is wrapping up the fifth special session with no consensus forming around a fiscal plan; except, perhaps, what Governor Walker calls the “No Action Plan.” The state is facing severe shortfalls this year and for years to come. With the rapid burn down of our savings, it is crucial for our state to diversify its sources of revenue. 

The situation is grave. David Teal, the Legislative Finance Director, provides the legislature and the Finance Committees numbers and projections but he seldom interprets the data. In a paper issued this month, he stepped out to make the following statement:

“Alaska is in the midst of the gravest fiscal crisis in state history: FY 16 and FY 17 revenue is expected to cover less than 30% of annual expenditure, leaving fiscal gaps that are too large to fill with sustainable draws from reserves. Many citizens believe – thanks in part to information provided by some legislators and various advocacy groups – that government expenditures have ballooned even as revenue has fallen.”

Teal’s paper and graphs demonstrate that the budget has been cut by 44% since FY 13 and our expenditures are at the same level as FY07. At the same time, our current revenue only pays for less than a third of our expenditures. In conclusion, Teal states that without combination of taxes, additional budget cuts, or use of permanent fund earnings, the budget reserves will not last through FY19.

When that happens, Governor Walker painted a gloomy picture during a press conference held on July 14. The cuts will be devastating with the impacts ending the Alaska Performance Scholarships and Power Cost Assistance (including revenue assistance). Most government agency operating budgets would be a fraction of current levels with school funding reduced to a third of the current amount. All general funding to the University of Alaska would cease.

Even with the dire predictions, the House just adjourned from the fifth special session without a fiscal plan but with a number of floor speeches critical of state spending.  Several decried the Governor’s veto of half the anticipated $2,000 permanent fund check to $1,000, claiming that state government was still too bloated and needed further reductions. One decried the continuation of merit steps earned by some state employees. 

Not all legislators agreed with the vetoes made by Governor Walker to education, the university and state agencies; there was dismay the legislature as a whole was accepting all the decreases – especially to school debt and the base student allocation – as the apparent fiscal plan.

The Senate is scheduled to meet again on Monday, July 18,  where it is expected they will end the special session and head home until next January.

When they come home and begin holding events and knocking on your door, ask them: how exactly do they propose to fix the budget? Ask them to be specific.