OP-ED: Don’t give up – we can do this
Alaska’s operating budget has grown out of control
Let’s get something straight. Alaska’s operating budget has grown out of control this past decade. It is on an unsustainable path that will mortgage Alaska families and businesses with more taxation and more long-term debt. The Alaska Chamber’s top priority is “to support reduction of State spending to sustainable levels.” That requires hard work and difficult decisions, but it’s the right thing to do.
Despite what you may hear in press conferences and headlines, the Alaska Legislature did their job. They listened to Alaskans, and built and passed an operating budget that reduced overall spending. It wasn’t easy. But in fact, 70 percent of the Legislature approved that compromise budget. A step in the right direction supported by Alaskans.
In a scientific poll conducted earlier this year, an overwhelming majority of those polled recognized the current state budget situation as “a problem.” When asked how to deal with that problem, the overwhelming response was to “make deep cuts to state spending, even if it means a reductions in services.” Like the Chamber and its members, the majority of Alaskans polled support getting State spending under control.
Negotiations now are no longer about how to responsibly reduce the State budget deficit. Instead, negotiations hinge on actually increasing deficit spending! The budget proposed by the Governor in the ongoing special session totals $5.78 billion, a $55 million increase over the legislature’s compromise budget, and a $34 million increase over the budget he proposed in February. The Governor campaigned on a 16 percent budget reduction, put forward an eight percent budget in February and now proposes additional spending.
We applauded Governor Walker and the tone he set in his January State of the Budget address. His budget, like his remarks, focused on getting a hold on Alaska’s spending problem. Only then, he admonished, would we turn our attention to taxes. In his press conference just this week, the Governor frankly stated that his efforts to reconvene his transition team would be to look specifically at new revenues, with no focus on how to reduce spending leaving his 16 percent reduction promise unfulfilled.
One thing is clear. Adding more money to the budget is not the solution. Doing so increases the deficit and moves Alaska further away from a sound fiscal future. Waiting doesn’t simply put off making cuts, it means that next year will demand deeper and more difficult cuts.
Getting Alaska's fiscal house in order requires dramatic changes to the lifestyle to which we have all become accustomed. It won’t be easy, but most Alaskans agree it’s time.
A sustainable budget should match spending levels to long-term revenues. The initial steps are not complicated – they are what we as individuals and businesses do daily to remain solvent. However, the critical step is reducing unnecessary spending. This means getting rid of the nice-to-haves. The second step is to find and create efficiencies for the must-haves.
The Chamber supports the work our elected officials have done creating a compromise budget for 2016 which garnered support by 70 percent of the Legislature. Now it’s time to fund it and move Alaska forward. Delays by those that seek to grow the budget only divide Alaskans without fixing the real problem. The Chamber supports using State budget reserves and/or investment earnings today in order to ease our transition to sustainable budgets for years to come.
Balancing policies governing Alaska business is crucial to our survival and success as Alaskans. This means we must be disciplined in our pursuit of sustainable State budgets resisting knee-jerk policies that could jeopardize our long-term future. We must prioritize our must-have State services. Then we must find, create and maximize efficiencies in delivering those services. We must manage our savings and investments with our children, grandchildren and great grandchildren in mind.
We must continue to come together as Alaskans and do what businesses and households do daily — live within our means. Short-term pains will be balanced by a sustainable budget path forward that will create a more secure fiscal future. Alaskan’s long-term prosperity depends on it, and it’s the right thing to do.
Rachael Petro serves as the President and CEO of the Alaska State Chamber of Commerce. The Alaska Chamber’s mission is to improve Alaska’s business climate.