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Commentary

Juneau, we have a problem... Budget concerns threaten economic confidence

  • Author: Curtis Thayer
  • Updated: July 5, 2016
  • Published June 5, 2016

A $4 billion spending gap isn't the only crisis facing lawmakers and the governor this year in this special session. Elected officials are also facing a crisis of confidence.

In late March, the Alaska Chamber of Commerce commissioned a statewide poll to gauge voter perception of business and the economy. Conducted by Dittman Research, the poll's sample size included 404 Alaskans and has a margin of error 4.87 percent.

This lack of confidence has perpetuated the state's inability to restructure government to a sustainable level. Last year, most Alaskans held state government in relatively high regard, with 64 percent reporting a favorable or better opinion. The number of Alaskans with faith in state government has plummeted over 20 points in 2016.

Alaskans are also concerned how the state's money troubles are impacting Alaska's economy. In 2015, Alaskan's were well aware state spending had ballooned to unsustainable levels. More than half of voters polled recognized the budget was a problem; one-fifth said state spending was a crisis. Today, that number has doubled, climbing to 49 percent.

What's behind these big swings in public concern?

In 2015, Alaska had a new governor with tough talk on spending. Legislators were arriving in Juneau with commitments to make the difficult decisions needed to prune a $6 billion spending habit down to a sustainable level.

Now – two legislative sessions, and a bewildering collection of special sessions later – Alaskans no longer believe the state is willing to make lasting changes to spending.

When asked what the most important issue the Alaska Legislature should tackle this year, Alaskans resoundingly answered, "fix the budget."

In 2015, balancing the budget was already the most mentioned expectation for lawmakers. The issue eclipsed constants like education funding and even spending cuts; those two priorities were tied in second place.

However, now 48 percent of Alaskans polled want the state budget deficit dealt with. The second most commonly volunteered priority is cuts to spending. Funding state services like economic diversity initiatives, and even education funding, didn't even come close.

These numbers illustrate a dramatic uptick in public concern. Last year, Alaskans were bullish about the economy, even while acknowledging public spending was an item of concern. This year the number of Alaskans stating the economy is good or very good dipped below 50 percent.

Correspondingly, 71 percent of Alaskans now believe Alaska is on the wrong track, up from just 32 percent in 2015.

So what do Alaskans believe is the solution to the state's budget woes?

Alaskans want deeper cuts to state spending. More than any option, including new taxes or tapping into Permanent Fund earnings – more even than a combination of taxes and cuts – voters want a state government that Alaska can afford.

And they are correct in wanting this.

Efforts in Juneau this year are focused predominantly on "new revenue;" fees, cutting industry incentives, new taxes, and increases to existing taxes. But while debates over these catch-what-we-can revenue initiatives are dominating discussion, they fail to address the budget crisis.

Using the fiscal notes from the Office of Management and Budget, all new revenue measures combined generate $855 million. That's enough money to fund state government for a little over a month.

Now what about the other 11 months?

The state chamber believes spending must be brought in line while Alaska savings are still available as a resource. To that end, we support efforts to reduce the state's operating budget to a sustainable level by creating an endowment model or similar framework to use Permanent Fund earnings to support essential services. Only then should we explore new, broad-based taxes, if needed.

Alaskans are aware of the problem. They're accepting of the necessary solution. They're just waiting for leadership with the discipline and resolve to get the job done.

Curtis W. Thayer is lifelong Alaskan and serves as president and CEO of the Alaska Chamber.

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@alaskadispatch.com. Send submissions shorter than 200 words to letters@alaskadispatch.com or click here to submit via any web browser.

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