#AKbudget| Unfortunately, deficits matter … (addendum dated 4.25.2014)

As readers of this blog’s “Page Two” will know, during the last few days of the session — and on into overtime — I have been building and populating some Excel spread sheets to put the budget being worked on this session (for FY 2015) and the one previous — in other words, the two budgets passed by this (the 28th) Legislature) — in a historical context.

Although this session is not quite finished — as of this writing the conference committee required to finalize the FY 2015 capital budget has not yet met — at this point the differences appear to be in a small enough range so as not to materially affect the overall outcome.

While the posts on Page Two have examined the data in additional ways, for many readers the most interesting questions appear to arise when the data is broken down by Governor.  As a result, in addition to presenting the data by year, in the far righthand columns the following table also summarizes and averages the data over the term of each Governor.

Click on graphic to enlarge.

The most troubling things the data reveals for me are the way in which state spending and, more recently, deficits have spiraled out of control during the term of the current Governor.

No doubt many in this Legislature (not to mention the current Governor) will tout the fact that they were able finally this year to start bringing state spending under control, and there is some basis for that.  Thanks significantly to contributing $3 billion from the CBR to PERS/TRS, this legislature appears to have reduced “annualized” state spending this year by what some will claim to be a billion dollars from last year’s level (the PERS/TRS fix is responsible for about a third of that).

But that accomplishment is not nearly as comforting as it sounds on the surface, because at the same time revenues have fallen even more rapidly, with the effect that this Legislature — those elected in 2012 — are headed home at the end of this session having enacted the two largest budget deficits in Alaska’s history.  

Indeed, counting the $3 billion transferred from the CBR to PERS/TRS, this Legislature will go home having drained, in their two years alone, roughly 35% (or $6.2 billion) from the combined balance of the state’s two primary savings accounts (the CBR and SBR).

I know that some ran during the 2012 election on the platform that they are “fiscal conservatives” and will likely continue to claim that even as they head home.   Even though they cut spending during their time in Juneau, however, its going to be tough to back up that claim because of their failure at the same time to keep their eye on the ball as revenues declined even faster.

In short they cut, but not nearly fast or deep enough to keep up with what was going on — and is anticipated to continue going on over the next several years (at Table A-4b) — on the revenue side.  Some would phrase that as “winning the battle, but losing the war.”

You have to wonder if, rather than allowing average state spending levels to increase by over 25% from those approved by his predecessor, in retrospect this Governor wishes he had held a much tighter reign on the treasury, making it easier to respond as revenues have declined.

As one who sees the coming fiscal gap almost upon us, I know that I wish he had.

Addendum (4.25.2014)

Refinements occurring as of the end of the legislative session earlier today result in a change to the FY 2015 spending level included on the chart from $6.19 billion to $6.17 billion.   The revised number is explained in greater detail here.  Because of the small nature of the change, the revised number does not affect any of the other numbers reflected on the chart, including the averages shown on the bottom right calculated for the term of the Parnell Administration.