President’s Letter, February 2019

PresidentsLetter

Annually, the APDC Legislative Committee (LC) schedules a two-day Fly-In event to Juneau where we meet individually with representatives from our executive and legislative branches of government as well as several state agencies. The purpose of this event is to advance issues important to APDC.

Over that past several years, we have been consistent in our support of a balanced and sustainable state budget. To help balance the budget, Senate Bill 26 (SB-26) was passed in the spring of 2018, which provides for a measured draw from the Earnings Reserve Account (ERA)  within the Permanent Fund. In 2019, the structured 5.25% withdrawal from the ERA is estimated to be $2.8 billion; $1 billion funded the Permanent Fund Dividend (PFD) payouts and $1.8 billion went to the general fund to balance the budget. The structured draw under SB-26 significantly closed the state revenue gap, stabilized what was left in the state savings accounts, and was sustainable.

This year’s Fly-In was February 6-7, 2019. APDC’s primary issues of concern this legislative session are:

  1. Increase the state’s capital budget to $2.1 billion and reestablish maintenance and operations funding for our transportation facilities.
  2. Lobby for the incremental funding request of $251,300 to improve Fire Marshal review times to reduce costly impacts on construction.
  3. Support the Alaska Board of Registration for Architects, Engineers, and Land Surveyors in regulating the design profession.
  4. Advocate and support science, technology, engineering, and mathematics education in our schools and colleges.
  5. Advocate for earthquake safety for schools and public facilities.

Understanding that these issues require additional revenue, we expressed support for raising state revenue. We concluded our meetings with the understanding that our legislators supported our concerns but additional funding would be difficult, particularly with the uncertain budget messages coming from the Governor office.

On February 13, 2019, one week after our visits, Governor Dunleavy unveiled his amended FY2020 budget. His budget proposes to reduce the state’s operational and capital budgets by an additional $1.6 billion. Rather than embracing the intent of SB-26 to stabilize the state’s savings and provide a sustainable budget, Governor Dunleavy has opted to use significantly more of the FY2020 structured draw from the ERA for higher PFD payouts instead of supporting the general fund and capital budgets. Paying a higher dividend results in a larger budget deficit, given that the structured draw is a fixed amount.

The State of Alaska is currently experiencing a recession, primarily as a result of state dependency on oil revenue. The recession has continued for six years because state government has been unable to agree on a solution. Since the beginning of the recession, the state’s saving accounts have been reduced from more than $15 billion to $2.4 billion. SB-26 was a step toward reducing the state’s dependency on oil revenues by diversifying our revenue stream. With the proposed FY2020 budget, the current recession facing the state could become far more severe and continue for a longer duration.

The Governor’s proposed budget will have devastating impacts to the future of Alaska because it does not invest in long-term solutions; rather it just puts more money into individuals’ pockets. The short-term gratification from an excessive PDF seems appealing, but not at the sacrifice of our education, capital improvements, and maintenance budgets. Without sustainable, forward-thinking funding for core elements necessary to the future of our State:

  • Infrastructure will continue to deteriorate
  • State and school buildings will not be upgraded to seismic safety levels
  • K-12 education and the University of Alaska system, which are paramount to the future of Alaska’s workforce development, will weaken
  • Business will not invest in a state with an unstable budget

We cannot risk the future of our state. I encourage you to contact your Senator, Representative, and the Governor. A contact list of legislators can be found here. We must fund our capital projects, maintenance, and education through solid, sustainable budgets and diversified revenue sources.

*This is an opinion editorial representing the view of APDC President Mike Rabe, and not necessarily the view of all APDC members. 

 

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