Despite having to deal with a massive budget deficit, Alaska’s slightly more moderate House of Representatives is working pretty well.
That’s the report from Sitka Rep. Jonathan Kreiss-Tomkins, who spoke to the Sitka Chamber of Commerce on Wednesday (3-4-15).
But Kreiss-Tomkins also said solutions Alaska’s fiscal problems are far beyond the scope of any political shifts in government.
The House Finance Committee is taking testimony from residents in Kreiss-Tomkins’ district this afternoon (Thu 3-5-15) beginning at 4:30 PM. Participants are asked to arrive 15 minutes early and sign in at the Legislative Information Office in the Totem Square building. You’ll have 2-minutes to testify before the Finance Committee on any matter of the state’s budget. For KCAW listeners who don’t have a LIO in their communities, please call 907-465-4648 for instructions on how to call in to the Finance Committee. If you would like to submit a written comment, you can email the committee here.
Just how bad is a $3.5-billion deficit? Rep. Jonathan Kreiss-Tomkins didn’t need a thesaurus to spell it out.
“It’s dreary, and macabre, and dark.”
Kreiss-Tomkins also portrayed Alaska’s reality in a more concrete way. Residents of the US are accustomed to hearing large deficit and spending figures tossed around. But even for Alaska, $3.5-billion is pretty huge.
He gave two examples.
The first is: The State of Alaska could let go — could fire — every single state employee from Ketchikan, to Kotzebue, to Unalaska, and it would cover about half our budget deficit. About half of the $3.5-billion — every state employee gone. The second anecdote I want to offer: We could zero out all k-12 education funding in the state of Alaska. The Sitka School district gets nothing. Every single school district in the State of Alaska gets nothing. Every regional attendance area gets nothing. The Department of Education gets nothing. We could zero out all state contributions to the State of Alaska university system, and we could zero out every dollar that goes to Medicaid, and that would get us about two-thirds of the way through our budget deficit. So it’s a very, very significant number, a $3.5-billion dollar deficit.
If that was the dreary and the dark news, Kreiss-Tomkins then asked the Chamber to picture the macabre: Oil prices suddenly reverse their slide, and skyrocket back to $150 per barrel. Even this doesn’t close the gap.
Our financial standing doesn’t improve that much because of our new tax regime. If oil becomes wildly profitable, the state’s share of the profit of that oil — at $150 per barrel — is greatly diminished, given all the tax policy we’ve busied ourselves with the last two years, namely SB21.
SB21 — or Senate Bill 21 — was the revision in oil tax regime developed by former Governor Sean Parnell in last year’s legislature. More moderate Republicans, like Sitka’s Sen. Bert Stedman, opposed SB21 on the grounds that it disadvantaged the state. Alaska voters nevertheless refused to repeal SB21 when it appeared on the ballot last year.
But voters did turn out Sean Parnell, and put Bill Walker in the governor’s office. They also elected a more moderate Republican majority in Alaska’s House, which Kreiss-Tomkins said has been positive change.
Yet there is tension now, Kreiss-Tomkins said, because Walker campaigned on accepting the Medicaid expansion under the Affordable Care Act, or Obamacare. Kreiss-Tomkins called it “one of the more important policy calls we’re going to make in Alaska.”
Medicaid expansion, over the short- and medium-term, is a multi-billion dollar infusion into the state economy. It’s a huge infusion of money to health care institutions that currently are responsible for providing charity care for anyone who walks in through the emergency room doors. So there’s a direct financial interest for anyone who cares about our local health care institutions to expand Medicaid.
Under the expansion, states are reimbursed by the federal government for 100-percent of costs through 2016. The amount of the reimbursement then tapers to 90-percent by 2020 — where it would remain indefinitely, unless Congress changes the law. That was the issue for former Gov. Sean Parnell, and it’s the source of the tension now between Gov. Walker and the legislative leadership. What if Alaska is stuck with the check for Medicaid at some point in the future?
In Alaska’s current budget “apocalypse,” as Kreiss-Tomkins calls it, the state has very little to gamble on the future. Alaska can get by on deep, painful cuts for two years, he says, until the state’s savings are gone.
After that, we’re going to make very big decisions that are going to alter the status quo we’ve had in Alaska for the last 40 years.
In addition to budget solvency and Medicaid expansion, Kreiss-Tomkins said that the third major issue before legislature this session was adopting a legal framework for the commercialization of marijuana