Prosperity Alaska (PA), one of the partners in annually preparing the “Alaska Business Report Card,” released its 2012 General Election candidate ratings this past week. The ratings provide a “thumbs up” or “thumbs down” on candidates from a “business perspective,” and PA provides endorsements in most legislative races of the candidate it thinks is more in tune with that perspective.
PA got one race terribly wrong.
PA states that it’s mission is to “promote responsible economic development, fiscal policy and general prosperity by educating, engaging and empowering Alaskans on important public policy issues,” and generally speaking, I believe that it is doing a good job fulfilling that objective. The work it has done on state spending — see “Alaska Budgets Have Run Amok” — is important, accurate and timely. Its board members include people that I personally know and respect.
But, they still got one endorsement horribly wrong. That endorsement is of Bob Lynn, the incumbent in House District 23. In my opinion, Lynn deserves a “thumbs down.”
Lynn deserves a “thumbs down” for a number of reasons, not the least of which is that he voted for ACES and AGIA and remained committed to ACES as late as during his last campaign in 2010. At best, he is a “Johnny come lately” to the cause of oil tax reform.
But that is not the crux of the problem with Lynn. The core problem is his history on fiscal issues. The last two years, Lynn has voted for the two largest budgets in Alaska’s history. True, there are others endorsed by PA that also have done the same, but Lynn has gone the remainder of that group one significant step further.
Last session, Lynn introduced legislation that would make Alaska’s coming budget problems substantially worse, by reinstating a defined benefit plan for public employees. That separates him from the remainder of the pack and deserves a resolute “thumbs down.”
Most of the readers of these pages already will know that Alaska’s experience with defined benefit plans is not a good one. For a variety of reasons, under its previous defined benefit plan Alaska has built up a substantial unfunded liability that, for a long time into the future, will remain a significant drag on state government. As the report at the link indicates, providing government employees with the option of returning to a defined benefit plan only worsens the problem.
Yet, that is exactly what Lynn’s bill — H.B. 236, “Teachers & Pub Employee Retirement Plans,” — would have done. The slant of the bill can be gathered by the co-sponsors. Of the fourteen co-sponsors (Rep. Muñoz, Rep. Kerttula, Rep. Kawasaki, Rep. Miller, Rep. Tuck, Rep. Holmes, Rep. Guttenberg, Rep. Petersen, Rep. Gardner, Rep. Gruenberg, Rep. Foster, Rep. Gara, Rep. Herron, Rep. Edgmon), only one was a Republican, and that is Rep. Munoz, whose district includes the public-employee heavy city of Juneau.
As Deputy Commissioner of Administration Mike Barnhill said, “if Lynn’s bill … passes, it will extend out the liability now projected to be paid off in 70 years. ‘It would continue indefinitely, because we’re now promising to pay defined benefits to a new generation of State of Alaska employees.’ All the reasons an unfunded liability can be created in a defined benefit plan would be true under … HB 236 …. ‘So the risks of a new unfunded liability being created in that new system are very high.'”
As if that isn’t sufficient, there is another, related reason to be concerned about Lynn. Interestingly, in evaluating Representative Bryce Edgmon, a member of the House Majority, the PA rankings give him a “thumbs down,” because of “his strong backing from public employee unions,” which PA concludes will lead him generally to “vote to keep taxes and spending high.” The percent of Rep. Edgmon’s financial support coming from unions is 39% ($5,500) within the reporting period covered by PA’s summary.
The level of union support for Rep. Lynn for the same period is 54% ($13,000). If “strong public employee union backing” is a cause for concern with Rep. Edgmon, it should be even more so with Lynn. PA doesn’t reconcile the differences.
On the other hand, despite being the Democrat in the race, Lupe Marroquin has received no union support for her election. Instead, she has relied almost entirely on support from individuals (including $500 from me).
More importantly, both by training (she has 24 years of professional experience in public finance, budget analysis & management accounting) and outlook, Ms. Marroquin recognizes and is committed to resolving Alaska’s looming fiscal problems.
As Ms. Marroquin explains on her website:
With a career in finance and experience as a budget analyst, I know where the money goes. … With declining oil reserves, the future of Alaska is in jeopardy, especially if spending continues to escalate as it does now. I am focused on a sustainable budget. With practical spending, we can reinvest in Alaska and save for the future our children deserve.
On the other hand, Lynn’s last entry on his website is entitled, “Legislative Skits.” Seriously; as of the day of this writing, that’s the last topic that Lynn spoke about to the public on his website.
There is nothing on the website that discusses his position on fiscal issues, and nothing which attempts to reconcile the self-described (and evidently new found) “fiscal conservatism” reflected in his responses to the PA questionnaire, with his authorship of H. B. 236.
In deciding to endorse Lynn, PA said this about Ms. Marroquin, “her positions on other important prosperity issues are unclear as she did not answer the business community’s survey below. One revealing hint is that she appears to blame Alaska’s refineries and/or distributors for high gasoline prices. ”
Perhaps she should have responded to PA’s survey, but PA nevertheless endorsed some other candidates who did not (for example, Reps. Foster and Herron), and took a neutral posture even on some who did not, who are without a previous record and have a very sparse website (for example, District 30 candidate Elizabeth Diament).
Certainly, in the face of Lynn’s proposed raid on the state fiscal system, Ms. Marroquin’s comments on gasoline issues are not disqualifying. Alaska has conducted several reviews of the gasoline pricing system in the state over the past few years and found no basis for concern about legal violations. Personally, I would trade five more investigations for one responsible vote on the state budget. The issues simply are not of the same magnitude.
Perhaps one explanation of PA’s endorsement is that Lynn voted for HB 110, the Governor’s proposed oil tax reform legislation, and Ms. Marroquin has been more cautious about oil tax reform.
But as I have explained elsewhere, given the spending spree the legislature has gone on the last two years — with Lynn’s support — there now can be no oil tax reform without fiscal reform first.
As Office of Management and Budget Director Karen Rehfeld testified at the end of last spring’s special session, cutting oil taxes as proposed by the Governor in his most recent version of the oil tax reform bill (H.B. 3001) would result immediately in a deficit in the state budget.
The chart on the right, included as part of Rehfeld’s testimony — and which I have previously called “the most important slide of this election” — tells the story. In the budget’s present condition, the passage of the version of oil tax reform last proposed by the Governor would result in an immediate deficit in the state budget of over $600 million. That deficit would grow to over $1 billion per year by Fiscal Year 2018.
As a consequence, even if oil tax reform is the most important issue facing the state, it is more important at this point first to send knowledgeable, thoughtful, proven and committed budget cutters to Juneau, than more of the same old, “let’s spend all the cash we have, call ourselves fiscal conservatives and then hold the Legislative Skits” Republicans, even if the latter are more likely to vote for oil tax reform than the former.
Put simply, Alaskans can’t afford the Bob Lynn’s of the world anymore, and PA should have blown the whistle on him now, given the quality of the candidate on the other side.
The failure to do so rewards mediocrity — it rewards someone who apparently cares more about “Legislative Skits” than sound fiscal policy. PA usually is better than that.
As I said in another piece, borrowing heavily from Ted Stevens, “‘To hell with politics. Do what is right for Alaska.’ Vote for Lupe Marroquin for House District 23.” Despite PA’s rankings, I hope that the readers of these pages will take that advice to heart.