Oh, that obstinate budget

Wednesday, February 19, 2014 - 23:00
Legislative delegation ponder tough decisions

About 30 Chugiak and Eagle River residents gathered in an airy and open room of the new Chugiak Senior Center on Feb. 15 for a Legislative Delegation Town Hall Meeting.

The serene atmosphere lent an odd juxtaposition to the seriousness of the matter.

Namely, the budget.

Before all that began, though, Rep. Bill Stoltze presented a memoriam citation in memory of Clovis Roberts.

“Clovis talked to me a lot,” he said. “I never heard whining or sniffling. Clovis will be missed.”

Sen. Fred Dyson then took the floor next.

Dyson, who recently announced that he won’t be running for another term, stressed that Alaska is facing tough issues.

The biggest, of course, is declining oil prices.

“Ninety percent of Alaska income comes from oil revue and no other source of income will ever compare to that,” he said.

Yet he’s optimistic that SB21 will help the state garner more revue.

“Under ACES, we were not getting the new investments,” he said.

ACES, or Alaska’s Clear & Equitable Share, replaced the Petroleum Production Tax of 2006 and levied a tax on net profits after expenses.

Dyson cautioned that the naysayers to give SB21 a chance.

“It just went into effect Jan. 1,” he said, adding that it hasn’t had time to make an impact.

Rep. Dan Saddler seconded that oil production is on the downswing.

“You can kill the goose and take the golden egg and get it all at once,” he said.

Or, he said, you can take a longer-term and broader view, which might not be as lucrative initially but could possibly pan out in the future.

Stoltze said that our pension funds are eating us alive.

So are increased heating fuel and healthcare costs.

“It’s the most unglamorous but important thing, these thieves in the dark, these budget thieves,” he said.

He likened Alaska’s fiscal situation to someone trying to pay off credit card debt.

“You don’t go out to eat or the movies,” he said. “You stay home, cut back.”

Which is what Alaska needs to do, it needs to cut down to a leaner capital budget and that might unfortunately mean forsaking one agenda for another.

“We’re probably up to about $3 million in requests right now,” he said.

Careful consideration needs to be made in terms of what operating budgets should be continued.

“It’s like a sled dog team and you need to cut 5 percent. You don’t just cut a paw off of every dog,” he said.

According to Dyson, we need to take care of what we have and be more cautious before taking on new projects.

“The bottom line is we need to do something, but what is the right thing to do?

The pension fund, he said, is “a perfect storm.”

“In 2007, our funds got caught up in bad economic situations, bad investments,” he said.

Stoltze said that the whole situation scares the death out of him.

“We have three and four hour meetings on this and it’s mind-numbing,” he said. “You come out and your head hurts.”

Sen. Anna Fairchild wondered if we should front-end the retirement money or flat-pay it over time.

“We want our retirees that have been promised benefits to feel secure,” she said.

According to Dyson, most of the 20,000 state employees are doing a good job.

“Most of the bad decisions are made by the government. The employees are the good folks,” he said.

It is, he added, a classic dilemma: Does the state pay down the debt or manage the money in hopes of making more money off of it.

It’s a tough decision, he said, shaking his head.

Saddler took the floor to talk about the proposed gas pipeline and LNG (liquefied natural gas) project.

“The stakes are high for us,” he said.

Gas is expensive to process, and yet it’s a necessity he feels we must take.

“The world is changing and we’re trying to keep up with it,” he said.

Stoltze brought the discussion around to educational funding. Currently, the state spends 70 percent of its budget on welfare, Medicaid, Medicare and education.

“We talk about cutting back on the budget but you can only cut from the remaining 30 percent,” he said.

Once the cuts begin, it doesn’t take you long before they slice into essential programs such as snow plowing, police, etc..

“Some say, ‘I don’t care where the money comes from.’ But we can’t print money or make oil prices go up,” he said.

Dyson had a more colorful analogy.

“Any politician who gets up, beats his chest and says he’s going to save the budget is talking out of the end of his mouth,” he said.

During the public testimony portion of the meeting residents commented on everything from education cutbacks to HB 278 (increasing the base of student allocation and repealing the exit exam) and the proposed Eklutna monofill.

Rep. Lora Reinbold was absent from the meeting due to family medical concerns.

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