After following and reviewing closely the collective work of the House Finance Subcommittees last week, as finalized and presented early this week to the full House Finance Committee, I sent the following note this morning to the Chairs of the Subcommittees. The results of their efforts are available here; a good summary is here.
Wed, Mar 4, 2015 at 8:03 AM
To: Rep.Mark.Neuman@akleg.gov, Rep.Steve.Thompson@akleg.gov, Rep.Dan.Saddler@akleg.gov, Rep.Bryce.Edgmon@akleg.gov, “Rep. Lynn Gattis” <Rep.Lynn.Gattis@akleg.gov>, Rep.Cathy.Munoz@akleg.gov, Rep.Lance.Pruitt@akleg.gov, “Rep. Tammie Wilson” <Rep.Tammie.Wilson@akleg.gov>
Re: Congratulations for the work of the HFIN Subcommittees
This is to congratulate you collectively as Chairs of the House Finance subcommittees on your work thus far in addressing the current budget situation.
As you are aware, Scott Goldsmith and others at the University of Alaska-Anchorage’s Institute of Social and Economic Research (ISER) have long worked on and advocated a plan to put Alaska’s budgets on a sustainable path, which is fair to both current and future Alaskans and, because of the resulting long-term fiscal stability, would significantly increase Alaska’s attractiveness as a place for long-term investment. That approach has been endorsed by many who have looked at these issues deeply, including most recently Commonwealth North and the Alaska Chamber.
Earlier this year Dr. Goldsmith updated his work, concluding that the current “sustainable budget” level is $4.5 billion (UGF, operating and capital spending combined). Recognizing that achieving that level will require significant reductions in the Operating Budget, and as a result, significant changes in the way that state government operates, many who have looked seriously at these issues have concluded that the reductions are best accomplished over three years, with achievable reductions in total UGF spending to $5.5 billion for FY 2016, $5.0 billion for FY 2017 and $4.5 billion by FY 2018. While a graduated approach results in reductions in the state’s financial nest egg, and thus, a reduction in the sustainable budget level, the approach strikes a reasoned balance against the considerable effort that is required to re-envision parts of state government.
While Governor Walker’s proposed budget came some of the way toward the goal for FY 2016, it did not reach it. As previously calculated by Legislative Finance, the Governor’s proposed “pre-transfer” UGF budget totals approximately $5.62 Billion. As I look at the numbers, the work of the subcommittees incorporated into the Committee Substitute appears to have gone the rest of the way in setting a path to accomplish the goal for FY 2016. When added to the capital budget proposed by the Governor, your efforts have reduced the proposed “pre-transfer” UGF budget to $5.43 Billion.
I appreciate that over the next few days during the full Committee’s deliberations there will be objections, sometimes strenuously articulated, to some of the cuts and that there may be some need to reorder priorities within the overall amount.
The important and hard won collective achievement of the subcommittees should not be lost in the process, however. Having accomplished the critically important beach head of limiting total FY 2016 UGF spending to less than $5.5 Billion, the full Committee should stay focused on protecting that achievement going forward, both in finalizing the Operating Budget and when addressing the Capital Budget when it comes to the House.
Maintaining FY 2016 spending at no more than $5.5 Billion through the remainder of the legislative process and setting a certain path toward achieving similar reductions in FY 2017 and 2018 in order to reach sustainable levels will require a great deal of additional hard work both in this session and going forward. In recognition of the moment, however, I wanted to stop and congratulate the subcommittees on achieving an important first step. Having watched the sessions I know that it required difficult work. I commend and appreciate you making the efforts it took.
Bradford G. Keithley
Keithley Consulting, LLC
645 G St., Ste 100, No 796
Anchorage, Alaska 99501