Voices of Alaska: Alaska budget myth vs. fact

  • By Diane Kaplan
  • Saturday, March 26, 2016 6:12pm
  • Opinion

By now, nearly everyone is concerned about the state’s budget deficit. Research by Rasmuson Foundation shows that most Alaskans support some level of budget cuts to make state government more sustainable, but where?

When asked, 41 percent of Alaskans say they don’t know where to cut. Six percent say cut across the board; another 6 percent say just cut somewhere. Six percent of Alaskans say cut education, while two percent say no education cuts. Yet education makes up nearly 27 percent of the state’s budget.

While some point to a ballooning state budget, in reality per capita expenditures for many state agency operations have remained stable during the past decade. Huge annual fluctuations are present in capital spending, debt and paying oil tax credits to companies that have earned them.

It’s understandable that legislators are struggling to make decisions on cuts. Looking more closely at the unrestricted general fund, which contains the day-to-day operations of state government and its programs, we can see that two-thirds of our state expenditures are for education and health. Alaska cannot make meaningful reductions in its spending if these two departments are off the table. Making cuts here is unpopular with some, and there’s no denying that some Alaskans will be negatively affected as a result.

While the survey answers didn’t unveil many specific suggestions, it did point to frustration about perceived waste and unnecessary spending. And as the various budget proposals in Juneau begin to take shape, Alaskans should know what we’ve already cut in order to make good decisions about where we can absorb more cuts in the future. Despite perceptions, real cuts with real impacts were made last year.

Below are some common myths about last year’s cuts:

Myth: The cuts made so far are superficial.

Reality: Lawmakers approved more than $350 million in cuts to the operating budget last year, which amounts to an almost 10 percent decrease.

Myth: The number of state employees has been cut only by leaving vacant positions unfilled.

Reality: According to the Office of Management and Budget, as of last October, state agencies employed 587 fewer employees than a year earlier. Those are real pink slips, not just empty chairs left vacant. Add in temporary workers, Alaska Railroad employees, and the university — the number more than doubles.

Myth: The University of Alaska budget has been shielded from budget scrutiny.

Reality: The university budget has been cut for each of the past three years and by $26.4 million last year alone. Student tuition continues to rise. Educational offerings continue to be condensed.

Myth: Alaska heavily subsidizes a ferry system that benefits few Alaskans.

Reality: A recent study by the McDowell Group found that every dollar the state invests into the Alaska Marine Highway System generates two dollars in economic benefit across the state. Last year’s $9.8 million cut has reduced service, including mothballing the two newest ferries and leaving Prince William Sound ports without service for six weeks.

Myth: Roads aren’t being plowed just to make it appear there have been big budget cuts.

Reality: Last year the Highways, Aviation and Facilities department was cut by $15.3 million, which eliminated 34 jobs and reduced allowable costs for overtime and supplies. This means roads receive less maintenance, and in severe weather, response times are longer.

Myth: Public safety is immune from cuts.

Reality: As a result of a $14 million cut, Alaska lost all but two highway patrol positions, eliminated cold case investigations and announced the closure of stations in Girdwood, Talkeetna and Yakutat. A dozen communities will lose trooper positions — cutting six troopers in Fairbanks, five in Soldotna, and nine in Wasilla. Rural communities saw a 64 percent reduction in the number of village public safety officer positions — leaving only 78 in the entire state.

Myth: The Department of Administration doesn’t provide essential services, cut there.

Reality: The department, which was cut by $11 million last year, houses agencies and services important to safety and Alaska’s economy. Alaska’s 30 public radio and four public television stations, which were cut by 16 percent or $800,000 last year, are the only source of information in many rural areas and are the providers of the Emergency Alert System.

Myth: Cuts to the state budget don’t harm small businesses.

Reality: One example of how small business and state spending are linked is support for tourism marketing. Alaska will spend $7.8 million less on tourism marketing this year than the year before. Because tourism is a major economic driver in communities throughout the state, actions that reduce the number of visitors will have a negative effect on the small businesses that rely on the visitor industry.

Myth: Education spending just keeps growing.

Reality: The Legislature cut education spending by $100 million last year, mainly in non-classroom programs aimed at enhancing student success like teacher mentoring, early literacy programs, STEM demonstration projects, online distance courses and subsidies for broadband to schools.

Myth: We cut a lot last year and no one noticed. It must have been fat!

Reality: The reduction in capital spending for roads and public facilities last year has resulted in layoffs and wage reductions for many in the construction industry. Some local businesses are projecting a 50 percent drop in work activity by 2018 if capital spending continues at the current level.

To get to a long-term, sustainable budget, we need to find more cuts and efficiencies, but cuts alone will not work. We must have a comprehensive solution that includes taxes, reduced oil tax credits, use of the Permanent Fund earnings and all of the other tools available to us. I encourage Alaskans to try to balance the budget themselves using the Plan4Alaska Budget Challenge, online at challenge.Plan4Alaska.com. While our situation is urgent, Alaska is in a great position to adjust the state budget to protect our economy and preserve our unique way of life.

Diane Kaplan is president and CEO of Rasmuson Foundation, which launched Plan4Alaska.

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