Sunday, September 22, 2013

The Ghost of Alaska's Fiscal Future ...


Most of you, if not all, reading this page are familiar with the Charles Dickens' classic, A Christmas Carol. For the one or two that could use a quick refresher, it is the story of Ebenezer Scrooge, a misguided soul otherwise headed toward an inglorious end, but whose outlook and attitude are transformed as a result of visits from the Ghosts of Christmas Past, Present, and Future.

I don't intend to play out the entire book on these pages, but a piece in the Fairbanks News-Miner this week brought to mind one of the characters -- the Ghost of Christmas Future.

The article was about the Mushers' Hall in Fairbanks, and the decision to close it for this coming winter ("Mushers Hall in Fairbanks to close for winter"). The story said that "[f]acing a financial shortfall and an organizational upheaval, the Alaska Dog Mushers Association [ADMA] has decided to close the iconic log structure for the winter."

According to the story:
[The Hall] was built in the late 1970s or early 1980s after the ADMA received a large chunk of money from the Alaska Legislature to construct it .... Back then, when the oil and money were flowing, nobody ever thought about the costs associated with heating, maintaining and insuring the building, [ADMA President Mike McCowan] said.
Obviously, that approach isn't confined to some by-gone era. The state continues to appropriate money to build things, from high school football stadiums, to soccer fields, to baseball stadiums ... and most recently, to indoor tennis courts.

The Ghost of Christmas Future came to mind, however, when I read the following:
“That building has never really paid for itself for at least 25 years,” McCowan said. “As time went on, it became a bigger, more costly albatross.”
And the "albatross" is now taking down more than just the ability to operate building.
"As it stands now, the club is trying to scrape up enough money to pay the second half of its property taxes, which are due Nov. 1, as well as an insurance payment at the end of October. The club also owes almost $12,000 to its trail grooming contractor from last winter, and there is no money for trail grooming this season, which means the club may be forced to rely on volunteers to groom trails this winter. ... If people don’t volunteer and the trail isn’t groomed, what kind of trail are we going to have? ... The club approved a race schedule for the 2013-14 season in March, but whether that schedule is a realistic one is up for debate, McCowan said."
This reminded me of the Ghost of Christmas Future because, quite frankly, if Alaska remains on its current financial course, this is a story we will see playing out more and more in the years ahead. Like the Ghost showing Scrooge his future if he stayed on his current course, the Mushers Hall is a glimpse into what the future increasingly holds for Alaska if we stay on ours.

But unlike Scrooge, the message does not seem to be sinking in to the state's leaders. Rather than enabling the state to avoid the future the Mushers Hall foretells -- for example, by saving the money that otherwise would be spent on constructing additional buildings -- the current Administration and Legislature instead appear to be going at warp speed toward it.

For example, shortly after reading the story about the Mushers Hall in the News-Miner, I caught up with several tweets about a recent groundbreaking at UAA of a new engineering building. The following is an example:


The irony of the state constructing new buildings while others it has built in the past fall into trouble is one thing. But this particular tweet has a double irony.

The state already has a well-established and long recognized School of Engineering at UAF. Yet, in the 1980's the state established a second, and in many respects, duplicative program at UAA, which it subsequently expanded significantly in the 2000's and, now, is in the process of doing so again.

So, not only are those at the groundbreaking ignoring Alaska's Ghost of Christmas Future, to some degree they are taunting it, by building a new building which duplicates one which the state otherwise already has. (This isn't the only instance of the state's current construction craze, of course. Indeed, UAA now has an entire blog devoted to "New Construction.")

As UAA's very own Institute of Social and Economic Research has made clear:
Right now, the state is on a path it can’t sustain. Growing spending and falling revenues are creating a widening fiscal gap. In its 10-year fiscal plan, the state Office of Management and Budget (OMB) projects that spending the cash reserves might fill this gap until 2023.... But what happens after 2023? Reasonable assumptions about potential new revenue sources suggest we do not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash.
The crash already has hit the Mushers. By continuing on down this path, those who voted for and had their pictures taken at the opening of this duplicative facility are ensuring that there will be more such closures -- likely including at some point in the relatively near future the very building they are standing before when their picture was snapped (or maybe it will be the one at UAF instead).

I wonder if they will show up again for pictures when, like the Mushers Hall, those facilities are shuttered or repurposed. The Ghost of Christmas Future foretold that Scrooge would be required to face his future if he didn't learn his lesson. Maybe those involved should be bussed to Fairbanks this winter for a similar "photo op" at the closed and cold Mushers Hall.