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Basic Subtraction
The governor’s budget dropped in mid-December with a big, wet, disappointing thump. The record snowfall at the end of the month was both more inspiring and more fun.
There are still some big pieces missing. As introduced, his spending proposal has a $1.5 billion deficit. The current year will need a hefty supplemental to boot. Just to highlight a few specifics:
1) PFD checks. The governor asked for $2.4 billion this year to pay every Alaskan more than $3,600. Last year’s budget only balanced because the appropriation was lowered to $677 million. That paid every Alaskan $1,000. Without some broad-based revenues I question whether Alaska can even afford that much this coming year.
2) Underspending. The governor’s budget doesn’t fill the holes that will leave us with a supplemental north of $350 million this year. So it’s short by at least that much for next year. It also proposes no dollars for deferred maintenance on K-12 schools, the University’s roofs & boilers, or the Court System’s facilities statewide. And there is no investment in almost any state program. That means, just for example, our public assistance will keep having the worst accuracy rates in the United States. That promises to bring new federal penalties—and less help for needy Alaskans when new federal rules tie funding to accuracy rates.
3) Amendments. Medicaid adjustments always come in during the session. I predict this year they’ll add at least $40 million. Five public employee union contracts are in negotiations and while the number of workers aren’t colossal, some of them are groups of workers to whom this governor has been financially generous in the past. That’s not a bad thing, but it is a cost. Wildland fire fighting costs have yet to be fully tallied from last year, and other disaster assistance needs (including from Typhoon Halong) will add to the bill.
The governor proposes tapping our savings to pay the giant PFDs and other costs. It looks like his proposals would need about $1.9 billion from the CBR’s $3 billion balance. Since you can’t even do that twice, it’s safe to predict that idea won’t fly.
Making recurring revenues and recurring expenditures match is never easy. The governor introduced his version of a fiscal plan just this week (more on that in next week’s newsletter!) Between shoveling our way through that and digging a path to a budget, we’ll need all 121 days of the session to shovel out.
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