Now, it’s personal.
On Monday morning, state employees received an unpleasant message from Gov. Bill Walker. If the Legislature can’t come to an agreement on a budget by July 1, the state will lay off 15,000 of its 16,000 employees.
The budget the Alaska Legislature passed at the end of its regular session in Juneau was incomplete — it doesn’t have enough revenue to pay for an entire year of operations. Without changes, the state would run out of money in the fall and face a shutdown.
Gov. Walker isn’t willing to wait. He’s said an incomplete budget isn’t acceptable. On Monday, he set a deadline of July 1, the start of the fiscal year, for the Legislature to act.
“We have until July 1 before we need to start shutting down any state functions that are not necessary to protect the life, health and safety of Alaskans. However, we have contractual and moral obligations to let our employees know they may be temporarily laid off July 1 if the budget is unfunded,” Walker wrote.
The Legislature faces a big task, but it isn’t an insurmountable one. In fact, it could fix the problem in the afternoon. All it needs is a simple majority vote to pay for state operations from the Alaska Permanent Fund’s earnings reserve.
As the Legislature’s regular session wound down, lawmakers came up with a spending plan that makes sense. In the House-Senate conference committee, they set spending levels higher than the Senate wanted but lower than the House wanted. It was a good compromise that left everyone equally unhappy. Unfortunately, lawmakers didn’t agree on a way to pay for that spending plan.
To this point, the Legislature has focused on trying to find a way to pay for state operations with money from the $10 billion Constitutional Budget Reserve.
Tapping the reserve requires a three-quarters vote of the House and Senate. The Senate majority has 15 members and a three-quarters majority. The House majority doesn’t have the three-quarters vote it needs.
On the last day of regular session work in Juneau, members of the majority said the minority asked for too much in exchange for their votes: millions of dollars in reversed cuts and the advance of Medicaid expansion.
If the minority is unwilling to compromise, the majority must have the courage to solve the problem on its own.
The Permanent Fund earnings reserve is not the Permanent Fund’s principal — it is an interest account from which dividends are drawn. Tapping it would be a big step. Using it to pay for government operations likely would mean less money in the autumn dividend checks given to every Alaskan.
For many Alaskans, the impact of the year-old fall in oil prices has not yet hit home. We can think of no better way to bring attention to the issue than a smaller dividend.
It’s easy to point fingers and say Republicans are responsible for this decision, or Democrats are, or Gov. Bill Walker is. The reality is that none are blameless. The Republican-led House and Senate majorities have not acted. The Democratic-led minorities have refused to compromise. Gov. Walker has turned the situation into a showdown at high noon.
A smaller dividend is a price well worth paying to end this impasse. When it comes to a choice between a bonus that benefits ourselves and the jobs of our friends and neighbors, we know the correct option.
Drawing on the earnings reserve will not solve every problem; it merely solves the most immediate one.
Lawmakers will still face tough choices on further cuts and tax increases, but tapping the earnings reserve now means they will have time to consider those choices and make a rational, sensible decision.
— Juneau Empire,
May 19
