by Vicki Turner Malone
Over a hundred people gathered at the Yupiit Piciryarait Cultural Center in Bethel on Saturday, March 21, during a town hall meeting – part of an effort by the State House to hear testimony across Alaska. Rep Andy Josephson (D-Anchorage) and Rep. Tiffany Zulkosky (D-Bethel) listened closely to village leaders from Bethel, Akiak, Kwethluk, Quinhagak, to organizational leaders and to citizens as each person provided clear and sometimes emotional testimony about the negative impacts of the proposed Dunleavy budget on all residents of the YK Delta.
About 30 people offered spoken testimony, and many others submitted written testimony. Without exception, each person who spoke outlined the devastating budget cuts on the YK region—Medicaid, Power Cost Equalization, University of Alaska, K-12 Education Programs, KYUK, programs for our most vulnerable populations, programs affecting municipal support, transportation and down the list of the proposed cuts.
BACKGROUND TO FISCAL CRISIS: We spent our savings
The state of Alaska has three savings accounts within the Permanent Fund structure:
The PERMANENT FUND: Sixty-five billion. Can’t be touched. Constitutional says so. We have to live off the earnings after the oil is gone.
RAINY DAY ACCOUNT: (Constitutional Budget Reserve) $2 billion. Almost gone! In 2014, when oil prices tanked and production began to drop, the State began using these funds. Drawing down on this account. Savings went from 17 billion to 2 billion.
EARNING RESERVE ACCOUNT: This account gets the interest and gains on investments from the PERMANENT FUND. It varies every year depending on how well the Permanent Fund does. In the Walker administration, the State began using the Earning Reserve Account to balance the budget. This cut the PFD’s to $1600.
CURRENT INCOME AND EXPENSES: State revenues from mostly oil are at about 2.3 billion and the current expenditures are 5.27 billion. In order to continue funding state programs at the current level, Alaska is short three billion!
SHORT TERM (FY2020) CHOICES TO PREVENT BUDGET CUTS: Cut the PFD
Representative Josephson presented a graph illustrating the options for the amount of cuts vs. the amount of the PFD which shows. A $3,000 PFD would result in 1.5 billion dollars in cuts. An $1800 PFD would require $600 million in cuts. A $630 PFD would require very few cuts. Many people in the meeting spoke in favor reducing the PFD payments. “I don’t need a new snow machine or a vacation, said one young man. “I just need to know we are all taken care of.” INSERT CHART
LONG TERM OPTIONS: Increase Revenues
Other states raise revenues through income tax. Alaska would also have the option of raising oil taxes. The additional revenue could fund state programs and leave more of the Earnings Reserve Account for dividends. When asked why this has not been considered, Josephson explained there was “little political appetite” for doing so. It is assumed that Rep. Josephson was referring to the Republican majority in the Senate and Governor Dunleavy who are opposed to the additional revenue generating measures of income tax and increased oil taxes.
The Power Cost Equalization Fund set up in the Walker administration to fund the Power Cost Equalization Program is also part of a long term fiscal plan. Governor Dunleavy wants to raid the PCE Fund which will mean an annual struggle. Given the history of the program—it was not fully funded for the first 17 years-an annual battle is not in the interest of rural Alaska.
WHAT CONCERNED RESIDENTS CAN DO
People can still submit written testimony to Rep Tiffany Zulkosky and/or Sen. Lyman Hoffman this week with a request that they be forwarded to appropriate legislators. The television station 360 North has a schedule of hearings and Representative Zulkosky has frequent updates. Email your representative if you want to be included in updates.