Opinions

Alaska business will back state budget that's disciplined, sustainable

I just returned from Juneau and the opening days of the 2016 legislative session.

I've been in the capital quite bit over my career, and I was struck this time by a sentiment shared by legislators from both sides of the aisle. Despite the dire fiscal times our state officials are charged with navigating, there is a sense of mutual responsibility and hope that this is the year for Alaska to finally tackle its fiscal challenges.

Certainly there are differing strategies to right Alaska's fiscal ship, but the state's private sector employers and the Alaska Chamber have advocated for sustainable state spending for years. I was pleased to see that feeling echoed in the governor's State of the State address.

Uncertainty of the state's financial future harms Alaska families and businesses. It has already damaged our credit rating and threatens to do so again.

That is something that truly resonates with people in the business community. This year, our lawmakers have the unenviable job of shoving a $4.5 billion state government peg through a $2 billion revenue hole.

I believe that lawmakers working to accomplish this goal will have the support of their constituents this fall. Like the governor said, we elect Alaskans to public service to do a job. This year, that job is incredibly clear and well-defined.

Last year, Alaska businesses outlined the necessary steps toward fiscal sustainability in a letter to Gov. Bill Walker and the Alaska Legislature. Everything starts with wrestling our ballooning state spending in line with sustainable revenues.

How?

• Prioritizing government services as defined by the constitution.
• Reviewing all formula-driven programs for cost effectiveness.
• Eliminating services that are not a function of government.
• Vigorously pursuing efficiencies to ensure continued delivery of essential services, which may include privatization or other methods to deliver services.

There's a common point of rhetoric that's become a staple of Alaska budget discussions -- "If we lay off every state employee, it still will not balance the budget."

It makes for a great sound bite, but using it as a justification to pass by the critical first step of achieving fiscal sustainability is disingenuous. The cumulative cost of state services and budget obligations are far greater than a single year of payroll expenses. They compound and grow over time.

Formula-based programs must be brought in line with state revenue. Spending outside the state's constitutional mandates is no longer a luxury Alaska's budget can afford. State services must be prioritized. Efficiencies must be pursued in delivering those services. And services that aren't a function of government must be eliminated.

The second step to financial stability is combining revenues with investment earnings to fund the essential responsibilities of government.

If revenues are still insufficient after these steps, the last option should be new taxes. Businesses will not invest in an undisciplined state that continually returns to taxation as an answer for its unsustainable spending.

Everyone who's looked closely at Alaska's budget problems understands that we have just three tools at our disposal: spending cuts, Permanent Fund earnings and new revenues. It's unlikely that Alaskans and Alaska businesses might willingly throw new tax dollars and the Permanent Fund down a state-spending hole without cuts and budget discipline.

Getting the state's fiscal house in order isn't a partisan issue. Our elected officials need to put politics aside and collectively make hard but judicious decisions. Together we can use our existing resources to keep Alaska moving forward as we look to tomorrow's opportunities.

A lifelong Alaskan, Curtis W. Thayer serves as the president and CEO of the Alaska Chamber, whose mission is to improve Alaska's business climate. Thayer recently served as commissioner of the Department of Administration and deputy commissioner of the Department of Commerce, Community and Economic Development under Gov. Sean Parnell.

The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch News, which welcomes a broad range of viewpoints. To submit a piece for consideration, email commentary(at)alaskadispatch.com. Send submissions shorter than 200 words to letters@alaskadispatch.com or click here to submit via any web browser.

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