A Tale of Two State Budget Presentations

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The Alaska state budget is one of those subjects you really have to want to understand and take a lot of initiative to have any chance of doing so, and even then you might not get there. It is an intimidating subject, with mountains of ever-changing information, competing interests presenting often contradictory claims, and political adversaries clouding the truth.

In just the last month we’ve seen Governor Walker release his budget. We’ve also seen prominent outside groups GCI, Rasmuson Foundation, and budget blogger Brad Keithley, just to name a few, offer their own ideas on re-imagining the state’s fiscal framework. Meanwhile, Republican legislative leaders have begun to weigh in.

All of this discussion ahead of next month’s opening of the legislative session has already afforded several questions for policy makers and average citizens alike to mull over.  

Here are just a few of the more common ones I’ve heard mentioned:

  1. Does the Governor’s budget cut enough or even in the right places?
  2. Should we spend from the Permanent Fund Earnings Reserve, and does that count as a “raid on the PFD?”
  3. Should a statewide sales tax be part of the new revenue mix?
  4. Will a natural gas pipeline be built and provide the state with much needed revenues in the next decade?

I’ve been  curious how average Alaskans, consumed by their daily lives and seemingly uninterested in policy minutiae, were digesting all of this budget talk. Since no broad-based statewide polling has yet been made public, I thought I would attend two very different budget presentations for audiences of opposing political views to see just how those audiences were taking it in.

The first was an East Anchorage town hall meeting sponsored by Senator Bill Wielechowski, Rep. Max Gruenberg, and Rep. Gabrielle LeDoux with a budget presentation given by Revenue Commissioner Randy Hoffbeck. This was a presentation from an administration elected largely by Democrats and the meeting drew attendees mainly from Wielechowski distinctly middle class, urban, and moderate/left leaning state senate district.

The second presentation was held in the conservative hot bed Mat-Su Borough at a meeting of the “We’re more Republican than the Republicans, Republicans” group the Alaska Republican Assembly with the budget presentation given by the fiscally conservative Brad Keithley. Also in attendance were Rep. Lynn Gattis, Rep. Cathy Tilton, Rep. Shelley Hughes, and Alaska Republican Party Chairman Peter Goldberg.

The similarities and contrasts, both by the presenters and in the questions and comments offered by attendees were quite illuminating.

At the East Anchorage town hall Commissioner Hoffbeck laid out the broad strokes of the Governor’s plan while emphasizing the intended fairness of it saying the administration “Tried to spread the pain across all sectors.” He also made it clear the Governor felt his plan took great strides to rein in the budget because “The price of admission for talking about any additional revenues is more cuts.” Most interestingly though, Hoffbeck presented the Governor’s budget as more of a proposal to kick off discussion than one the Governor is wed to saying:

“We’re looking for a pretty robust set of budget discussions during legislative session this year, The Governor has said this plan is flexible, the parts are movable, and if you don’t like the balance between new revenues and expenditure cuts, come up with a new balance…but our only enemy is no plan at all. We have to address the problem and we have to address it this year.”

The audience appeared to receive the message with a calm acceptance, but as the questions and comments began, it was clear there was simmering anger in the people’s voices.

Attendees threw out a host of potential ideas that could save the state money, from putting the state’s checkbook online to moving the capital, and there were questions as to why a sales tax (or consumption tax) wasn’t part of the solution, but mostly attendees wanted to know “Why me?” Why were they and their meager lifestyles being targeted for new state revenues?

Their answer to their own question took aim at two groups, the wealthy and big oil.

Here are some of the comments that were made that night:

“It seems like all of your solutions are in favor of people who pay campaign contributions and resource extractors and against the children who receive Permanent Fund dividends, and you are taxing these kids because your corporate sponsors are telling you to cut their taxes, and I think it’s abhorrent.”

also

“Alaska was a great state before oil came to town… I think some of the mistakes we are making is [sic] thinking oil,oil,oil,oil,oil,oil,oil… We need to be thinking about fisheries and other means. I’m real against an income tax, but a sales tax, you could adjust consumption.”

and

“I make under $30,000 a year and you are going to take a little bit of my money to pay the bills of what we exploited in our state, and I’m barely making it on what I got. So my question is, and a friend of mine brought this up to me, so they are going to take $300 from all of us that make 25-30,000 a year, and they are going to have to do it with all 100 of us that work here to pay the bills, why can’t they just take it from six people who make $300,000 a year? Get it from the people that have the money. Let’s get realistic, take two percent from everybody, two percent from my salary, two percent from your $50,000 salary, two percent of your $300,000 salary. Why take it from people that don’t really have it?”

This past Tuesday at the Alaska Republican Assembly event, a similar albeit philosophically opposite scene unfolded. Budget blogger Brad Keithley gave an in depth explanation of the state’s fiscal situation and walked through four possible solutions he termed “Cuts Only”, “Sovereign Wealth Fund” (the Governor’s plan), “SB 114/GCI”, and “The Goldsmith Model” (which Keithley supports).

Here is a link to Keithley’s thoughts so you can review them for yourself.

One point to note from Keithley’s presentation was that he stated that to achieve a cuts only solution to the state’s budget woes would require a 50-60% cut to state spending going forward to FY 2021. There are a lot of people who know the budget, including I suspect Keithley himself, who would say that isn’t a legally viable solution, but never-the-less Keithley presented it as a real, doable option saying he had heard some talk about it and wanted people to see what it required. Even with that soft offering, during the active discussion that followed Keithley’s talk no one in the conservative crowd offered any version of “Well, if we can just solve this by cutting, let’s do that.”

Everyone, even conservatives and the Republican Party Chairman appear to have been sold on the idea cuts alone can’t achieve a balanced budget; new revenues to must be part of the solution. In a conservative state with a decades old tradition of citizens not paying broad based taxes to state government, that is no small development.

A second take away from the post presentation discussion was just how little of it focused on the state budget itself. There were one or two comments from folks skeptical the LNG pipeline and the revenues forecast to come with it would ever materialize, but mostly people in the crowd wanted to place blame for the situation on the federal government, President Obama, and illegal immigrants or refugees.

Here are just two comments from the evening:

“This looks to me like a socialist solution. Did anybody look at all of the benefits the Feds give us that suck Alaska money to match, or whatever, that it takes if we got rid of all the illegals, all the money we’d save with that, all of the money we would save with schools…This is one of the things they do, the feds offer you a dollar and you spend three. There are a bunch of these programs we don’t even need to do.”

also

“That natural gas, if you get that pipeline to where you want it, down here, the market price right now, is unsellable. It will be too high. It will cost too much. You couldn’t sell it to anyone. And as a shot in the dark, as if those oil prices are gonna go back up to $80, $90 a barrel, no one knows, but I guarantee you one thing, that illegal that is in the White House is up to something.”

Even Alaska Republican Party Chairman Peter Goldberg’s only comment of the evening was to ask Keithley how electing a Democrat as President of the United States next November would impact the state budget.

So the two presentations, with very different presenters, different budget messages, and conflicting political views from attendees, produced largely the same, yet politically mirrored outcome.

In place of state-centric facts and figures, Alaskans on either side of the political spectrum are mentally retreating into a blame game and filling in the holes in their understanding of state policy with national political narratives that fit their particular ideology. For liberals that means the rich, corporations, and big oil are to blame. For Tea Party conservatives it’s Obama, the federal government, and foreigners who are the culprits.

To be fair to Hoffbeck, Keithley, and all of the the elected officials mentioned here, none of them played to these national narratives or spoke about who was to blame. They all seemed to genuinely want to talk about real, achievable solutions. Sadly, they were in the distinct minority.

As far as deciding what they want as a solution, it would appear, at least from watching these two events, Alaskans aren’t close to knowing the options on the table or comparatively understanding what they want, let alone organizing or advocating to policy makers to achieve it.

  • AKFooFighter

    “I’ve been curious how average Alaskans, consumed by their daily lives and seemingly uninterested in policy minutiae, were digesting all of this budget talk.”

  • AKFooFighter

    “I’ve been curious how average Alaskans, consumed by their daily lives and seemingly uninterested in policy minutiae, were digesting all of this budget talk.”

    Well done, sir. To me, the quoted material above is the crux of the issue. The “common folk” aren’t digesting anything or at least aren’t doing it on the level some of us might expect. It’s on #AKLeg to pony up an actual budget with actionable changes (cut programs, new revenue streams, a grown-up plan) and then allow the citizenry to make their voices heard in the voting booth.

    But we know how this is going to go. The Leggys don’t have the integrity to risk their jobs by making real decisions. So the budget presentations and town halls will continue and do nothing more than pile up in the “white noise” department.

    Again, I appreciate your efforts in putting this piece together. #Cheers

  • akfellow

    It is becoming increasingly evident that our entire leadership in Juneau is satisfied with our “One Basket – One Egg” economic model.