EDITORIAL: The Alaska Legislature’s fiscal shortsightedness wears thin

If there were a doctor who monitored the goings-on at Alaska’s State Capitol Building, the time of death for any hope of a fiscal plan this year would have been declared last week, as legislative caucus leaders signaled defeat on efforts to call a special session to address Alaska’s structural budget issues. That was hardly a surprise — the House majority in particular, though nominally united under a Republican banner, was made up of warring elements whose disagreements on all manner of issues often spilled out into the open and stymied progress. But the latest chapter of “The Legislature fails to get its act together” is nonetheless a bitter frustration for Alaskans who sent their representatives to Juneau with a mandate to craft a responsible, sustainable budget framework instead of bickering over the size of the Permanent Fund dividend and trusting that the oil price fairy will arrive to bail out their rosy revenue assumptions.

Perhaps the most cruelly comic of the circumstances surrounding the Legislature’s now decade-long failure to draw up a long-term solution to the fact that oil revenues can no longer cover the vast majority of Alaska’s expenses is the approach championed by big-PFD hardliners. They want to enshrine the dividend in the Alaska Constitution, thus placing its payment ahead of every other fiscal priority, including those like education and public safety that our state’s framers considered so important that Alaska’s founding document specifically addressed the government’s responsibility to provide them. Maybe there’s a state whose residents are so cynical that they would willingly trade their children’s education for a fat government check each year, but that’s not Alaska — at least not the Alaska we know.

And despite the mega-PFD hardliners’ attempts to don the mantle of fiscal conservatism, they’ve been perfectly happy to spend $18 billion in state savings over the past decade rather than accept the reality that our revenues can no longer support their have-your-cake-and-eat-it-too mindset. Thanks in large part to the propensity to overspend on the PFD, several of the past 10 years’ budgets have been among the largest in Alaska’s history, and the hard truth is that it has been Republicans holding the purse strings in many cases.

A better approach to the state’s fiscal woes would be to set up guardrails first, as a family does with its household budgeting. A sensible budget cap that allows for the funding of services but not the extravagant overspending of oil-boom years would be the logical first step; after that’s accomplished, the task of deciding how to allocate the funds within that cap would be a simpler and more responsible process — and would end the shenanigans of drastically overspending on PFDs in election years, which politicians have used as a ploy to help ensure their re-election.

Time is short. Fiscal models by the Alaska Permanent Fund Corp. show that in low-growth scenarios over the next few years, the fund’s earnings reserve — which supplies more than half of the state’s budget revenue — could be exhausted within three to four years. If that happens, not only will it mean the end of the PFDs, it will usher in an era of spending austerity that will cripple Alaska’s economy and its public services. It would be a fiscal apocalypse that would make the oil price crash (and ensuing budget chaos) of the late 1980s seem like a mild inconvenience by comparison. For the first time since its inception, the Permanent Fund itself is now at risk.

Alaska can’t afford more legislative inaction on a long-term budget framework. Tell your legislators that you expect them to come to the table in January 2024 ready to do the job you elected them to accomplish. Tell them that if they come home without a spending cap that includes the PFD, they don’t need to figure out how to get their belongings back to the Capitol in 2025, because they won’t be returning. Tell them that Alaska’s future is more important than their desire to have their own perfect budget scenario adopted verbatim. And tell them they don’t have time to engage in this same old song and dance again.