Rural Alaska faces fiscal challenges
Last month in Fairbanks I was honored to address the Alaska Federation of Natives Annual Convention as chairman of the House Bush Caucus. I was joined on stage by fellow caucus members Rep. Ben Nageak of Barrow, Rep. Neal Foster of Nome, Rep. Bob Herron of Bethel and Rep. David Guttenberg of Fairbanks. Other Bush Caucus members in town for AFN included Rep. Alan Austerman of Kodiak, Rep. Beth Kerttula of Juneau, and Rep. Jonathan Kreiss-Tomkins of Sitka.
The Bush Caucus has grown in recent years to include rural and coastal legislators from across the state. The bi-partisan group now numbers 12, and our districts cover vast areas of the Interior and about 98 percent of Alaska’s coastline.
In my remarks to the convention, I explained that throughout the legislative session we work together – meeting on a weekly basis – to look out for the interests of all rural Alaskans. Our guiding principles emphasize the health and safety of our constituents and the wellbeing and sustainability of bush communities. Our priorities also include striving for affordable energy for our communities, strengthening our schools, supporting programs to battle domestic violence and sexual assault, and promoting resource development that creates jobs but also protects our environment and our renewable economic and subsistence resources. The caucus is unified in its opposition to any requirement for photo identification for Alaskan voters, and we are against a constitutional amendment that would threaten our rural schools by allowing state funding for private schools.
During the 2013 legislative session we worked to safeguard crucial funding for many essential programs:
• We helped to make sure that PCE was fully funded, at more than $40 million.
• More than $50 million was put toward continuing the state’s Home Weatherization Grant and Rebate Programs – which have saved consumers an average of 30 percent on heat and electricity bills.
• Five additional VPSO positions were funded for rural villages.
• The Alaska Council on Domestic Violence and Sexual Assault received full funding for its programs.
• Rural schools received help with soaring energy costs through more than $45 million added to this year’s formula funding.
• $25 million was put toward the Renewable Energy Grant Fund, which is only just beginning to help communities lower their dependence on diesel fuel.
• Passage of SB88 funded the construction of a 170-bed patient housing facility next to the Alaska Native Medical Center.
• Low Income Heating Assistance was funded at $26 million, $10 million of which is state funding added to the federal grant.
Fiscal Challenges Looming
But as I spoke to the convention I also felt obligated to talk about the very real financial difficulties Alaska now faces.
The job of Bush legislators is about to become a lot more difficult. Not because our effort and commitment have wavered, but because lower oil prices, lower oil production, and Senate Bill 21’s tax cuts for the oil companies means billions of dollars less revenue for Alaska in the years to come.
According to the state’s financial analysts, we are already looking at a deficit of more than $250 million for the FY13 budget passed in 2012. For the present fiscal year’s budget, FY14, the numbers are even more alarming, with at least $1 billion in likely revenue shortfalls. So even as we begin to make plans for state spending for FY15, we know that we will have to draw from our state savings accounts (now at about $17 billion) just to make the past two years balance.
This means that the pressure to cut spending this coming legislative session will be intense.
At this moment, Gov. Parnell, who has already announced plans to cut state spending by 15 percent over the next five years, is working with state agencies to assemble his proposed FY15 budget by the mid-December deadline. The governor has already put on record his desire to limit withdrawals from state savings, so what doesn’t come from savings will have to come from reductions in the Operating Budget and a dramatic scaling back on Capital Budget spending.
During the upcoming legislative session, we in the Bush Caucus will need to work harder than ever to help our Railbelt colleagues understand that many programs and infrastructure investments are a matter of survival for rural Alaska. If you are looking to trim fat from operating budgets, you are not going to find it in programs that already provide only survival-level support to struggling villages. And if you are going to nurture economies that lead to a self-sufficient future for rural communities, you cannot put off the creation of crucial economic development infrastructure.
Clearly, Alaska is entering a period of spending austerity. We will all need to make sacrifices and adjust our expectations. The tough times ahead are unavoidable, but we should at least make certain that we bear the burden equitably. A large part of the Bush Caucus’s work in Juneau in coming years will be to make sure future budget cuts do not fall disproportionately on rural Alaskans.