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A fiscal reality check: The problem is balance

  • Author: Julie Kitka
    | Opinion
  • Updated: April 26, 2019
  • Published April 26, 2019

The Alaska State Capitol is seen at sunset Wednesday, March 6, 2019 in Juneau. (James Brooks / ADN)

I have always believed that most all problems are fixable. It is not necessary to be divisive and create fear in our people to solve problems. I also believe we have to have the vision and understanding to realize we are living in a time of rapid change. We must also be smart enough to look for the opportunities in the change, as well as anticipate possible unintended consequences and counter them as best we can. This is what real leadership is about.

Our state has a budget-balancing problem. We are a wealthy state: land and resource wealth, savings wealth and people wealth. We are the envy of many parts of the world. Complain? Fight? This is not what true leaders do. We strive to balance critical decisions in every session of our Legislature.

In light of the Legislature’s work on next year’s budget and the Dunleavy administration’s fiscal claims and proposals, the Alaska Federation of Natives is calling for the type of well-thought-out, data-driven solutions that can only come from a good government driven by Alaskans. Solutions must be born of a vision of what our state is and can be.

The term “good government” refers to how well the state is meeting the needs of the people, as well as to the leadership our elected officials provide. It also includes an engaged population holding our elected officials accountable and supporting them when they are doing well. We are concerned with the proposed huge budget cuts resulting in our neighbors losing their jobs, a continuing unstable recession-prone economy, and empty savings accounts — all without a vision we can believe in.

The term “driven by Alaskans” refers to how well the Dunleavy administration is educating and engaging Alaskans on its policies. Transparent, informative and meaningful engagement are two-way communication flows. The administration’s budget proposal places so much strain on the state’s economic and social foundations that many Alaskans are wondering whether Alaskans were in the room, let alone the driver’s seat, when the administration’s policies were crafted.

AFN commends the Alaska House of Representatives for restoring a number of core areas eliminated or severely reduced by the Dunleavy administration’s budget proposal. Passing the budget they did took common sense and courage. We hope the Senate keeps Alaskans in mind as it works on its version of the operating budget. We understand that many legislators, like us, are finding it difficult to support the administration’s assertion that the “state has a spending problem” without relevant facts.

In our view, good government is responsible government. Education is a constitutional responsibility. The founders at the constitutional convention recognized that investing in our children to give them the best preparation for the future is indispensable to our society. The current and potential capabilities of all Alaskans are a critical asset and should be viewed as such. Public safety is another core responsibility of government. The critical services by dedicated troopers, local police forces, village public safety officers and other first responders must remain a top priority. The Alaska House restored to the 2020 budget many other valuable state services which individual Alaskans cannot provide, but collectively through the state we can provide.

There is another approach to the challenge of squaring revenue and spending in an inherently volatile, oil resource dependent economy. First, we agree that we are really talking about priorities – what to do right now, and what path to take going forward.

Second, let’s factor into our decisions all the activity going on in the state today and try to get some perspective. For example, there is an unprecedented military build-up. In addition to the Alaska-based missile defense system, our state is home to the largest fifth-generation F-35 squadron anywhere in the world. The buildup is happening because the federal government has recognized Alaska’s rapidly growing strategic importance and global competition over natural resources and influence. What kind of partner is our state with the U.S. military and federal government? Why are we not discussing ways to strengthen our Alaska National Guard, our critical infrastructure, including the Port of Alaska (Anchorage), emergency preparedness, food security and resiliency of our people? Why are we not supporting increased investment in math, science and technology – one of the biggest drivers of change occurring today in our world?

Good government is sensible government. It requires insight from wise and ordinary people who demand that we prepare for the future amid this rapid change. We know we need to find ways to do with less state services. For this to happen we need to trust each other and ensure that the state government considers all options in crafting an innovative and fair fiscal plan. Willingness to make sacrifices, and patience to get through this tough time, is essential, especially when we consider the Permanent Fund dividend. Maybe we just have to be patient and defer increases or retro payments until we are on stronger economic ground.

The problem of focusing on the Permanent Fund dividend — how to calculate it, how much should go out this year, and whether the current formula or a revised one should be embedded in the Constitution — is that it takes the focus off the Permanent Fund itself. Currently at $63.9 billion and projected to rise to approximately $72 billion within the next 10 years, it is our collective savings account. With personal savings accounts, most people cannot save if basic needs are not being met. This is true for the Permanent Fund.

The danger of the current climate of drastic state budget cuts, without analysis of its impacts on real people or assessment of unintended consequences, is that it takes away from the public purpose for keeping the Permanent Fund. The Permanent Fund was created nearly 40 years ago; it’s time we considered whether the original intent is still acceptable and workable for today’s and tomorrow’s generations. As we consider possible constitutional amendments which will forever embed tax structures and other policies, we need to design our own constitutional amendments: to answer the contemporary needs of our state, allow us to invest in critical infrastructure and create a stronger state for the future. The current constitutional amendments put on the table by the governor are not the only way forward. We can create other options designed to create a safety valve in our economy and allow us to move forward as a state.

That’s the hard truth. Good government isn’t easy. It requires real discussion. Real debate. Two-way communication. We can do this together.

Julie Kitka is the president of the Alaska Federation of Natives.

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