By any measure, Alaska stands on shaky fiscal ground right now. The best news for the state is that COVID-19 case numbers are trending down while vaccinations tick slowly upward, giving workers, Alaskans and tourists reason to resume a life that more closely resembles their pre-pandemic normal. But ask just about any business owner, and they’ll tell you their worries are far from over. As the economic engines of the U.S. and the world at large sputter back toward full capacity, there are widespread, unpredictable hiccups and bottlenecks in both the supply chain and the labor workforce. Every where you look, prices are rising precipitously and Alaska, at the end of that supply chain, remains particularly vulnerable.
On top of that, the state’s budget situation remains precarious. Even after burning through close to $16 billion in savings over the past half-decade, Alaska lawmakers are no closer to a sustainable budget plan, and may even take $1.5 billion more than the legal limit from the Permanent Fund this year, squandering future earnings for Alaskans in the name of a larger one-time check. To make matters even worse, legislators have run past the end of their regular session and are midway through a monthlong special session, with little sign of progress on passing any budget, to say nothing of one that balances without overtaxing our Permanent Fund. If the Legislature can’t get its act together and pass the budget before July 1, the state government will shut down. This would add unnecessary chaos to an already fragile economy, hamper Alaska’s emergence from the pandemic and cost millions upon millions of dollars in money we can scarce afford to waste.
There’s a sort of simplistic appeal to a government shutdown for those who are skeptical of the value of government in the first place. It’s understandable that people can come to feel that way, especially if their chief exposure to state government is watching lawmakers kick the can down on the road on budget matters every year, spending from savings and pulling down plenty of per diem money while doing so. But it’s important to remember that government touches many aspects of the services we depend on — education, public safety, health care, transportation — and as such, a government shutdown can disrupt all of those services, and many more besides. And in the end, government shutdowns don’t save money.
The list of potential service interruptions from a state government shutdown, historically, is long. They range from commercial and sport fishing opening interruptions, delayed Permanent Fund dividend checks, idled ferries, closed state parks and campgrounds, halted opioid treatment programs and a host of other items. It’s a virtual certainty that aspects of Alaska’s continuing efforts to close out the pandemic would be compromised. A shutdown would also mean the vast majority of state workers — of which there are approximately 15,000 — would be out of work and at least temporarily unpaid. That would be a huge hit to the amount of money circulating in Alaska’s economy, as state workers make up close to 5% of Alaska’s total employed workforce. Private businesses that depend on spending from those employees don’t need that kind of uncertainty now; they’ve got more than enough to navigate as it is. And at a time when unemployment is already far too high, we don’t need thousands more of our neighbors suddenly out of work.
There’s still time for a budget consensus to emerge — more than three weeks. But if legislators are going to hammer out a spending plan in that time, those discussions need to be happening now. And it’s been awfully quiet in Juneau lately with regard to progress on major sticking points, such as the amount of the Permanent Fund dividend and the total draw from fund earnings.
Budgeting by brinksmanship is perhaps the worst way to develop policy meant to be crafted over the course of a months-long regular session. It makes a mockery of the public process, as the most consequential and expensive parts of the state’s budget are decided behind closed doors — literally, as the public remains barred from the state capitol building despite virtually all other government buildings re-opening — in conference committee, then passed in an abrupt floor vote with no meaningful opportunity for constituents’ input. It’s also a process that essentially guarantees the problem will repeat itself in short order: If you wait to develop a household spending plan until the utility company is about to shut off your heat, you’re not going to make a budget that puts you on solid footing for the long term — you’re going to do just enough to avoid the immediate crisis and punt the problem to the next billing cycle. The Legislature has been barely avoiding disconnect notices for the better part of a decade, and it’s not fair to Alaskans.
Let your legislators know that you expect them to do their jobs in the weeks ahead. A shutdown this year would be unacceptable.