Alaska’s Fiscal Crisis: Irresponsible Spending vs. Responsible Resource Development
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i.e. Socialism vs. Free Enterprise
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Socialism seeks to control the means, transportation and distribution of production. Two socialists are competing for the Democrat presidential primary. One of those socialists has been endorsed by Alaska democrats. Alaska’s democrats are in a partnership with Alaska’s “independent” governor. The Governor wants equity control over a gas pipeline project and exercises bureaucratic control over a potential gas distribution utility in Fairbanks, Alaska — to begin with. Socialists have stopped the Keystone XL project nationally and opposed virtually every viable natural resource project in Alaska for the last 7 years. Socialist strategy: NEVER COMPROMISE. Mainstream America: NEARLY ALWAYS COMPROMISES. Thus, freedom and Constitutional protection are continually diluted. As the commentaries below indicate, most Americans perceive there to be a fight about fiscal and natural resource policies. Actually, the fight is about whether socialists or mainstream Americans prevail in the November elections; whether the traditional American model will withstand enemies from within or fade under domination of a new socialist power structure. Alaska’s so-called “fiscal crisis” is merely the Northernmost battlefront as citizens of the United States decide whether they wish to maintain freedom or surrender it to powerful government bureaucracies and loyal constituencies of entitlement program beneficiaries. -dh
by
Dave Harbour
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Proposing the best way but not the easy way to fiscal responsibility….
Reinbold’s logic and commentary are nearly flawless — for those who do not want to “fundamentally change the State of Alaska” into a bureaucratic shadow of what its independent, pioneering image used to be.
Today, Alaska State Representative Lora Reinbold (NGP Photo) provides a logical roadmap (below) that leads Alaska away from the fiscal crisis cliff toward which it is now headed. There are other ways of handling Alaska’s fiscal crisis, of course, but the other ways involve an expansion of the ratio of socialist control over Alaskans at the expense of free enterprise. Today, we felt bound to provide supplementary comments (i.e. below her commentary) to Reinbold’s roadmap to fiscal sustainability: the rationale for why it is critical to take her approach rather than the alternatives. We hope all of our North American readers find something of value as they confront very similar principles/policy decisions from Barrow, Seattle, Phoenix and Chicago to Inuvik, Calgary, Toronto, Montreal and New York…. -dh
Budget Illusions vs. Reality…The Budget Bottom Line!!!
By Representative Lora Reinbold
Eagle River, Alaska
State government is simply too big and the State Legislature has not made adequate progress in reducing the burden of big government. According to the State of Alaska, Office of Management and Budget, (www.omb.alaska.gov), only minimal reductions in the Total State Operating Budget have been achieved in the last 2 years (See Chart of Alaska Total Operating Cost). Note that the FY15 operating budget was off trend and higher because of an extraordinary $3 billion dollar direct appropriation for the State retirement liability. Comparing FY14 and FY16 total operating costs, a reduction of only 4.2% was achieved in 2 years! And for FY17, don’t hold your breath, preliminary budgets recommended by the Governor, and proposed by the House and Senate are projected to remain at historical highs.
Surprised? Despite the budget cutting rhetoric coming out of Juneau, little progress has been made on real cost reductions. The numbers are clear, the impact is real, and this level of spending on State government is unsustainable. It is time to fundamentally change the cost structure of government before we take more hard earned money from the citizens of Alaska, or raid the Permanent Fund, the savings account which fortunately is protected by our State Constitution.
So, why are the numbers so different? The House and Senate claim 10% cost reductions in proposed FY17 Unrestricted General Fund (UGF) expenditures. And similar budget reductions have been reported for the current FY16 budget. Here’s the problem. Reporting a reduction in expenditure from only this one funding source is misleading. The UGF is only a portion of the State Operating Budget, albeit a significant portion. The Total State Operating Budget is comprised of expenditures from the Unrestricted General Fund (UGF), Designated General Fund (DGF), Other State Funds, and Federal Receipts. When we talk about the cost of government, shouldn’t we talk about the Total Operating Cost? When you talk about the budget for your household, wouldn’t you balance total expenditures (total operating cost) against your total income (revenues)? If you look at the Total Operating Cost there is a clear reality- we have not reduced the massive footprint of big government.
While the Legislature works to cut UGF, our savings accounts are being quietly depleted to back-fill reductions in the UGF. Also, when supplemental budgets are implemented they offset reductions reported in prior budget years. This is evident in FY16, where a supplemental spending request of approximately $185M is pending in Legislature.
We must fundamentally change the way we construct the yearly State Operating Budget. Currently, the budget is constructed from the top down. We start with last year’s budget and the Governor’s request, and ask, “Is there anything we can cut?” We hold hearings where department commissioners vehemently defend their budgets, and special interest groups intensely lobby for their pet funding. Every potential budget cut has a constituency, and potentially a lobbyist, arguing passionately to keep their funding. Human nature and politics usually prevail, which make it very difficult to cut funding after programs and benefits have been established. Unfortunately, we grew state government during the good times, because again, human nature prevailed, i.e. it’s easy to give away someone else’s money to make someone happy. There are many people and organizations coming to Juneau pleading for us to not reduce funding. However the reality is we cannot afford to continue to spend at historic levels. The problem is that this bad behavior has left us in a difficult situation with difficult choices. While making these budget decisions we must never forget about the valued constituency, the businesses, the people and the next generation that will be asked to pay for these Denali sized budgets.
In my opinion, we, the State of Alaska, need to go through every department, every function, and every state owned entity, and ask, “Do we really need this function?”, and “Is it government’s role to provide this service?” Secondly, we need to benchmark the cost of state government, by comparing the Total Operating Cost for state government in Alaska to other states across the nation. As a starting point, we should target operating our state government at the national average.
So here’s the bottom-line. State government is still too big, too costly, and too inefficient. Governor Walker should take the lead and restructure his departments, improve operating efficiency, and demand accountability. Bench-marking costs would provide a standard and a goal for achieving cost efficiency. We must not tax Alaskans and draw from the Permanent Fund before we first ensure that Alaska is paying only for essential government services and delivering those services efficiently.
This video is a 3 min GREAT analogy of what we are doing to our kids!
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Dave Harbour Response:
Remember this. The Governor is allied with democrats. Alaska Democrats are now aligned with the socialist presidential candidate, whose primary opponent is also a socialist. The socialists and their Administration partner want either to make Alaska’s resources off limits or to control the means, transportation and distribution of production. The result of their handiwork is to repel mainstream voters from Alaska and attract socialist voters and power. The budget fight, therefore, is as much about socialist control of the state and its natural resources as it is about fiscal responsibility. Reinbold’s logic and commentary are nearly flawless — for those who do not want to “fundamentally change the State of Alaska” into a bureaucratic shadow of what its independent, pioneering image used to be. I hope that this background explains why the demands of special interests for lavish subsidies is both fiscally impossible and a clear and present danger to survival of free enterprise in the 49th state. The Legislature better get its act together right now or risk both the State’s bankruptcy and the loss of their free enterprise constituencies. dh
That Was The Week That Was
By NGP Reader and Policy Commentator David Blackmon (NGP Photo)
So, over the last week, we have had Islamic terrorist bombings in Brussels that murdered more than 30 people, including 2 Americans; Islamic terrorist bombings in Pakistan that murdered more than 70 innocent people, mostly Christians; the crucifixion on Good Friday of a Catholic priest by Islamic terrorists in Yemen, and ongoing Islamic terrorist mayhem throughout the Middle East and other Islamic countries.
During that same week, our President and his beautiful family flew to Cuba where the President was seen variously posing for a photo in front of a mural of his life-long hero, the murderous Che Guevara; doing the wave at a Cuban baseball game with Raul Castro; and spending 53 seconds discussing the Islamic terrorist bombings that took place that day in Brussels. He of course included in that 53 seconds the standard platitudes about how all of this Islamic terrorism doesn’t really have anything to do with Islam. It’s a requirement.
He and his family then flew to Argentina, where he was filmed dancing the tango with a voluptuous Argentinian dancer and where he gave a speech to students in which he said there was basically no difference between communism and capitalism. (In his final year in office, the veil is truly coming off.)
The President capped off his phenomenally irresponsible week yesterday by ironically moaning about what a shame it is that Donald Trump and Ted Cruz are getting all of this free media time, but that it isn’t accompanied by any accountability.
Breathtaking. Truly.
Also yesterday, we had our stupendously ineffectual Secretary of State, failed presidential candidate John Kerry, complaining about how “every European leader I talk to” recoils in horror about the tone of the GOP presidential nominating process. He – again ironically (these people apparently have no sense of self-awareness at all) – went on to say that Trump’s suggestion that the NATO Alliance needs to be restructured is raising questions about the United States’ “reliability” as an ally. I’m thinking such questions have already been raised in Israel, Iraq and other long-time “allies” of this country during this presidency.
Mr. Kerry’s remarks, of course, are right out of the Democrat playbook. The socialist, open-borders leaders in most European countries always recoil in horror at the prospect of any Republican actually winning the presidency, because they know that Republicans tend to favor the rights of American citizens and security of the United States over foreign concerns, unlike their Democratic counterparts.
Such prospects of the United States pulling inwards always raises alarm bells among Euro-socialists because they have become so conditioned to expect the U.S. to shell out hundreds of billions of dollars every year providing European security and footing the bills for myriad interventions in the Middle East and other global hot spots, while allowing the European nations to pretend to be an integral part of a “coalition” while footing almost none of the bill.
Were all of Uncle Sam’s largesse to suddenly go away, why, the Euro-socialists would have a far harder time than they already do in funding the massive social welfare states to which they have addicted their passive masses. Meaning, of course that, as we saw over the last few years in Greece, the masses would no longer be so passive and easily controlled.
These European leaders all know that a President Hillary Clinton will continue the gravy train. They’re pretty sure Trump would reform it significantly, and fear the same about Cruz.
Like the “Establishment” in Washington, the fears of the Euro-socialists are all about power and influence, and how to maintain them.
Whatever else you might think about Trump and Cruz, isn’t it a good thing that people such as these European leaders who Kerry pals around with are suddenly feeling very uncomfortable about their personal situations?
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