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Walker's budget moves don't inspire confidence

Gov. Bill Walker had quite a week to start off his dog days of summer.

First, through a published notice rather than a public announcement, he quietly let medical workers know the state will not give inflation-indexed increases to Medicaid providers this year.

On Wednesday, that drew blood on the medical community, which will see a loss of more than $100 million -- an impact that will be felt sharply in the major medical hubs of the state, including Southcentral, Fairbanks, and Juneau. Hardest hit will be the small private practices with the least amount of cushion.

While Department of Heath and Social Services Commissioner Valerie Davidson was quoted saying this would be one of the less painful cuts, it does not go unnoticed that public employee union (and nonunion) members received their expected cost-of-living increases. Private practice medical workers? Not so much.

Today, Alaska's medical providers, including pharmacists that provide medication to mothers and children on Medicaid, are currently reimbursed at below their costs for providing services and medicine. Now, they'll fall even further behind.

Cutting payments to doctors has a serious consequence, as shown by recent history: The number of participating Medicaid providers declined from fiscal years 2010 to 2013, in large part because Medicaid rates are not keeping up with inflation and the cost of living. Alaska has experienced a decline in the number of participating Medicaid providers from 2010 to 2014 by about 1,000 providers. In all the talk of expanding Medicaid, many of these facts were drowned out.

The smarter route is to reduce the number of optional services provided by Medicaid in Alaska. As it stands, if Alaska's Medicaid was classified as a private insurance offering, it would be considered a Cadillac plan subject to high federal taxation.

The second shoe to drop was when the governor boldly announced that $200 million in payments to the smaller oil and gas explorers would not be paid in this fiscal year. He's holding the checks.

Small companies that made their way to Alaska to drill and find oil and natural gas are owed tax credits by law. Their business decisions were based on Alaska's good word, and they got a haircut. These are the very companies that ensure Southcentral has enough natural gas and families do not face bone-chilling brownouts in the winter.

The governor has no explanation for why this is good fiscal management for the state, since the credits will have to be paid next year. He tried to convince us it's meant to start a conversation with Alaskans.

Gov. Walker, welcome to the conversation. It's been going on for some time. But here's how the conversation may be unfolding in the bond rating agencies in New York: "Alaska is not paying its bills. Let's flag that account. It needs to be watched."

Alaska's Triple-A bond rating is very possibly at risk now, and that also impacts municipalities, which face higher interest rates for future bonds.

As for future investors in Alaska, what is their takeaway about the stability of our state's leadership? The portrait is beginning to emerge:

In a Hugo Chavez move, Walker "nationalized" the Fairbanks Natural Gas entity, which allows his new government agency to operate without any market controls, just like Walker's failed Alaska Gasline Port Authority wanted to do all along.

Then, by fiat, Walker froze payments to our doctors and clinics.

Now, Walker decided not to pay small exploration companies until he is good and ready.

There are many ways to start a conversation: You submit a piece of legislation; you call a special session. But if your conversation begins by declaring you will not honor your word, you're going to have a different kind of dialogue.

For example, if we told our credit card companies we didn't want to pay them for a year "in order to start a conversation." They would respond by saying, "Great! See you at 21 percent interest and thanks for the dialogue! And, by the way, don't use that credit card until you're caught up on payments."

Unfortunately, small exploration companies don't have the ability to charge the state interest on what is essentially deferred revenue and squandered opportunity cost. Their vendors and employees have no recourse either.

When later this year Gov. Walker calls for a special session to discuss an income tax or sales tax, Alaskans will want to remember this is a guy who doesn't pay his bills to doctors and the small energy companies. What he promises and what he does are two different things.

Finally, governors deal with people who come to them to advance their own agendas; this is quite normal and goes on in every governor's office in America.

Walker, like all governors before him, must learn to develop a true spine, rather than a cliched backbone. Without that muscle memory developed by making tough decisions that have real consequences, he's finding himself ill-advised by operatives who are ready to pounce on his inexperience.

Thus, a pattern of incoherent leadership is developing, which could hurt the fragile trust he has with all Alaskans.

Suzanne Downing is communications director for the Alaska Republican Party.

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

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