These days, evidence of Alaska’s uncertain fiscal climate abounds. There’s a shortfall in senior benefit funding, and pink slips due to be sent out to hundreds of teachers. The Permanent Fund dividend was reduced for multiple years without a law change to provide for it. The state is poised to leave municipalities holding the bag on school bond debt after decades of helping carry the load. It’s easy enough to see the effects of this instability - talk to any Pioneer Home resident whose rates are due to jump up, or a Medicaid recipient left sweating when the program was underfunded last year. Or, for that matter, take a look at the state’s bond rating and the comments the ratings agencies made.
There’s also a simple solution that would go far toward helping restore that stability: Honesty in the budgeting process. As administrations and Legislatures have come and gone, each has promised greater transparency and plain dealing when it comes to the state’s services and revenue. And each has employed its own hedges and workarounds that betray those promises, causing hardship and anxiety for Alaskans. And although it’s far easier to pledge to keep promises than to do it, it’s high time our lawmakers did a better job for their constituents.
In fairness, forecasting revenue is a tough business. Sometimes, as with the senior benefits program, speedier processing of benefit applications results in more people than expected joining a program, draining funds more quickly. But failing to foresee scenarios like that - or deal with them swiftly when they arise - is a failure of leadership. Like not considering prices below $60 per barrel of oil as a realistic possibility for tax purposes, as happened before the 2014 price slump, failing to recognize or plan for the possibility of an uptick in benefit recipients is an indictment of our elected and appointed representatives.
Whatever your opinion of the oil tax credits that the state opted to not pay out to smaller oil explorers and producers, they’re a classic example of the state’s destabilizing tendency to make a promise and then leave those who make plans based on that promise holding the bag, making residents wary and businesses disinclined to make investments in Alaska. In the same vein, the $800,000 shortfall in senior benefits and the $20 million Gov. Dunleavy’s administration opted to keep from schools after it had already been allocated show that when it suits those in power, the state is all too often willing to change the rules of the game after the fact. Lawmakers can find legal justification for their action in “subject to appropriation” clauses in budgets. But the fact remains, as Robert Service said, that “a promise made is a debt unpaid,” and the state has made plenty of promises only to leave literal debts unpaid.
So what’s the better answer? Make the hard choices — fund services fully or be up-front about the fact that they’ve been cut — instead of kicking the can down the road. Don’t pull the rug out from under those who have made financial decisions based on the state’s promises. It’s admittedly riskier for legislators’ political prospects to consider goring sacred cows, setting up a two-year budget cycle for education or owning up to the full costs of services instead of shifting costs and hoping that oil prices rise. But it wouldn’t leave so many Alaskans, businesses and financial institutions wondering if this will be the year the house of cards will come crashing down on July 1, with a government shutdown or massive cuts that torpedo Alaska’s fragile economic recovery.