Rep. Mark Neuman believes this whole mess could have been avoided. He’s fed up with the political games. He believes this whole mess could have been avoided had the legislature moved from the caucus rules set at the beginning of the year. He also has no idea what Governor Dunleavy’s plan is for the State of Alaska.
Neuman believes we need to right-size the government, but also believes we have enough money to pass the budget proposed by Governor Walker last December and pay for a PFD. We aren’t broke.
“I just don’t think the public is clear with what Dunleavy’s plan is for the future of Alaska,” Neuman said in an interview on Friday. That was after the Governor had issued a proclamation to move the special session back to Juneau. “I know what my plan is and I know what the people in my district want, and it’s to right-size the state government. The plan on how to do that has to come from the administration.”
According to Neuman, business owners in his district are saying that the bureaucracy and expense to deal with the state has grown so much over the past decade that it is restricting growth in the business sector. If the governor does have a plan to streamline processes then it needs to be communicated.
Neuman is right. When I spoke to then-candidate Dunleavy and asked where his administration could cut, he would speak of “low-hanging fruit.” It’s there, he would say. We’re not now seeing cuts that are from low hanging fruit, but cuts coming from the top of the tree. For me, the argument that the Governor is fulfilling his campaign promise is more than a bit misleading.
There is no doubt there is room to cut state-level spending, but to Neuman’s point, there needs to be a clear plan as to why cuts are made to a department and what the state government will look like when the cuts are implemented. All we are seeing is general cuts.
Anybody who has successfully created and managed a budget will tell you that you don’t just cut without planning. You must ask yourself, after the cuts are made, what will be their effects? What is the plan? Once the plan is established, you work the plan; do not let the plan work you.
Neuman believes this whole legislative mess could have been avoided and throws the majority of the blame at the legislative leadership. Even before the last election some returning members met to put leadership in place.
As of May 31st there is $64.3 billion in the permanent fund. $45.3 billion of this is the protected principal and $19 billion is in earnings reserve.
Neuman, who has chaired the House Finance Committee in the past, states that all of this could have been avoided if the earnings reserve would have been used to pay for the budget. We have enough earnings that we could have paid for the budget proposed by Governor Walker or the legislature and a full PFD by using those funds, Neuman said. But because of caucus rules set at the beginning of the year, the earnings reserves fund is not being used. A vote of 21 in the house and 11 in the Senate could change that.
Since the inception of the permanent fund, the average annualized fund return has been 8.86%. The fiscal year 2018 return was 10.74%. That’s an outstanding return on investment.
If we use these funds, according to Neuman, we would still be putting $2.7 billion into the earnings reserve account that is nowsitting at around $19 billion.
We could cover the cost of this year’s budget, pay $1.9 billion dollars for the larger PFDs, and begin working a plan on reducing the size of State government. Instead, we are coming in like a bull in a china shop in the first year and destroying everything. We should proceed through a plan of action and build a budget for the future. The state would be in no worse position than where it started in 2019.
How big of a room would we need if the administration and the legislators would check their egos at the door and work together?
Dennis Anderson is Group Publisher for Wick Communications Alaska and Colorado.