RE: Governor's VetosBy Rep. Dan Ortiz
July 07, 2019
Starting with Mr. Dial’s characterization of the past cuts that he says have not “really” been made by the Legislature and/or our previous Governor Walker. He talks about the comparison vs. FY15 as the High, believing that the FY15 budget included the $3 billion retirement payment. That’s flat-out incorrect. The $3 billion Constitutional Budget Reserve Fund (CBRF) appropriation was direct from the CBRF to the retirement system. It never passed through the General Fund and was not part of any budget comparison.
We only need to look at the significant cuts that have been made to the AMHS, (vessel operations line item in 2015 was 111 million its now down to 30 million in the FY 20 operating budget) and the cuts that have been made to the Dept. of Fish and Game. In FY 15 UGF funding was at 79 million and is down to 52 million in FY 20. The residents living in coastal Alaska know that the cuts that have been made by the Legislature have been real and have resulted in significant local negative impacts to our economy. Those employed by state government in Alaska numbered 26,500 in May of 2015, by May of 2019 the number employed by the state dropped by 4000 people, to 22,500. (http://live.laborstats.alaska.gov) The removal of these family incomes from circulation in the state’s economy are a direct result of the painful cuts made by the Legislature to the state operating budget and funding to state agencies.
Additionally, the “high point” for past budgets was FY2013, where the total UGF spend was $7.75 billion. ($4.31 agency, $1.37 statewide, $2.07 capital). By FY15, the budget was only $6.01 billion ($4.47 agency, $0.61 statewide, $0.88 capital.) The FY15 agency budget was the high point at $4.47; this was reduced to $3.89 (13% but) by FY18 and was passed at $3.82 (15% cut) by the legislature this year.
As for oil credits, Gov. Walker only vetoed, at most, $630 million. The total amount remaining unpaid as of right now is about $740. The budget includes the receipt authority for the bonds to be sold to pay these off completely. Once the courts decide this, the issue will be resolved for good.
Mr. Dial made a valid point that the legislature has needed to produce supplemental budgets after passing “cuts” to the regular operating budgets for an upcoming fiscal year. While this is true these supplementals are a tiny percentage of the total government spend, and they tend to be very similar from year to year and get added to the year end “actuals” line in the budget. Thus they are part of the year to year comparisons that I’m making.
Contrary to Mr. Dial’s assertion there have been no meaningful UGF-DGF shifts in the past couple of years.
Total spending did not increase by $500 million last year as stated by Mr. Dial. Actually GF spending went up $200 million because of some fund sources changes made between FY 18 and 19. Perhaps in the figure he uses as a total increase in spending figure is because spending on the PFD increased by about $300 million, from $1,100 per to $1,600 per recipient.
Many reserve accounts have been depleted. This doesn’t hide the lack of budget cuts, it covers the deficits, that were still left over after these cuts have been made. The real problem lies not with spiraling operating budget increases but with a very substantial decline in oil tax revenue. Our UGF oil revenue declined from almost $9 billion in FY2012 to less than $1 billion in FY2017. We went from an era of multibillion-dollar structural surpluses to multibillion-dollar deficits. During the surplus time, previous Legislatures and Governors did increase our spending but we also saved many billions- that’s how we had the money to cover the last five years of shortfalls before we faced having to look at Earnings Reserve portion of the Permanent Fund.
The budget that passed the legislature this year, before vetoes, was balanced and provided enough funding to pay a $950 dividend. I realize that’s probably not a sufficient number for many Alaskans & District 36 residents. And I believe there will be at least a $1600 pfd this year when it’s all said and done. However, everyone needs to know the opportunity costs involved in letting the vetoes stand and perhaps distributing the “full” 3K PFD: No funding for Senior Benefits provided to our most needy seniors, no funding for preventative dental care to Adult Medicaid recipients. Plus proposed large fee increases to the residents of our Alaska Pioneer Homes. A 135 million (41%) cut in state support for our University of Alaska system, likely resulting in massive staff layoffs and elimination of many degree option programs, resulting in tuition losses possibly amounting to 69 million and 44 million reduction in federal grant monies. No funding for the State Council on the Arts which brings funding reductions to our very own First City Players and the Ketchikan Area Arts and Humanities Council. No state support for Public Radio including our very own KRBD. These are just some of the costs involved if each of us were to receive a 3K PFD.
Finally, Mr. Dial offers a critique of me in relationship to the issue of non-boroughed areas in the state and the fact that folks living in these areas make no direct contribution to the funding of the Public Education services that are provided in these areas. I agree with him that this is an issue and I have been and continue to be committed to find ways to remediate the problem. As I told the Borough Assembly over a year and ½ ago, as soon and if the state adopts a statewide tax of any kind, I will look to add a 100% credit towards any proposed new tax obligation, of all property taxes that folks pay in organized boroughs that goes towards funding of state provided public education. As an added note Governor Dunleavy’s veto of ½ the school bond debt obligation that has been covered by the State was paired with a 50% cut to the Regional Education Attendance Area and small municipal school district school fund. These are the areas who get their schools built for “free.”
However, I would contend that the problem is being a bit overstated and mischaracterized by Mr. Dial. First more than ½ of Alaska is organized like Ketchikan. In reality closer to 90% of the population lives within organized boroughs. How many million-dollar homes are there on POW that aren’t within the cities of Craig (that has a 6 mills rate property tax), Hydaburg or Klawock whom each have a the same local contribution for education obligation that Ketchikan has? According to Alaska Taxable, the annual publication of the state assessor’s office, total non-oil property in the state is assessed at $89.3 billion. Not counting exempted property like federal / military, I would be stunned if there were more than $5 billion or so in assessed value in the parts of the state outside taxing jurisdictions. Especially when you factor in the $150,000 senior deduction which is a state mandate.
In summary I would like to again invite folks who live in District 36, to voice their positions on the issues that continue to face the State and its residents. I will have a telephonic “town meeting” opportunity on July 8, 2019, beginning at 5:00 p.m. where you can call in to do exactly that. I can also always be reached at 465-3824 or on my cell at 907-617-5116. I would love to hear directly from you what-ever your position is.
Rep. Dan Ortiz
Received July 05, 2019 - Published July 07, 2019
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