Thursday, October 24, 2013

The Alaska Democrats get it wrong ... again

Earlier this week the Anchorage Daily News ran an article headlined "Funding boom over, UAA moves to rank, and potentially cull, programs."  The gist of the story is summed up by the following:
Faced with declining funding from the state, UAA is doing an unprecedented, institution-wide examination of its sprawling offerings.  The soul-searching is called "prioritization." ... During the course of this school year, every program at UAA will be analyzed by a faculty-led group and then sorted into five competitive, equally-sized ranking groups. The top ranked will be first in line for funding. The lowest ranked could face elimination.
The funding drop is significant.
Right now, the state provides $1.30 for every dollar UAA gets from another source, he said. The state wants to go to a dollar-to-dollar ratio.  "We have already received guidance from the State that operations funding for the university will likely decline in the next fiscal year," the university wrote in a letter about prioritization posted on its website. The University of Alaska system's budget projection for the 2015 fiscal year is $30 million less than this year, the Juneau Empire reported in September.
Frankly, however, next year's drop is only the tip of the iceberg.  UAA needs to look no further than its own Institute of Social and Economic Research (ISER) to see what lies ahead.  According to ISER, "[r]ight now, the state is on a path it can’t sustain. Growing spending and falling revenues are creating a widening fiscal gap. ... 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."

Looking for news to support their issue du jour, the Alaska Democrats immediately jumped in with both feet, blaming the situation on the recent passage of SB 21 and immediately breaking out in a buzz of activity on Twitter.

Casualties of the Oil Giveaway: @uaanchorage "faced with declining funding from the state" 
The problem with that approach, of course, is that in their effort to fire quickly the Democrats picked the wrong target.

Let's concentrate again for a moment on the ISER report:  "[r]ight now, the state is on a path it can’t sustain. Growing spending and falling revenues are creating a widening fiscal gap. ... 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."

Guess what?  That analysis was written before the passage of SB 21, based on revenue projections assuming the continuation of ACES.  Alaska's budget is not crashing because of SB 21 (which, incidentally, according to testimony before the legislature last session produces a higher net present value than ACES), but according to the ISER report Alaska's budget is crashing because past state spending has gotten out of control ("[w]hat can the state do to avoid a major fiscal and economic crisis? The answer is to save more and restrict the rate of spending growth").

Want a poster child for that?  The Democrats can find one on UAA's own campus, the new UAA Sports Arena (pictured above), rising like the temple of doom that it is at the southwest corner of Providence Drive and Elmore.  Coming in at a list price of $109 million, the Arena is being funded entirely by state appropriations, at a time when similar facilities on every other campus in the United States requires at least 50% of the cost to be covered from private sources before one shovelful of earth is turned.

During his few, brief years as Governor, Sean Parnell has permitted state budgets to get out of control, to the point that they now threaten the very economic future of Alaska.  (Let's rewind the ISER report one more time:  "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.")

That is your story, Alaska Democrats, not some boogeyman of oil tax policy.
Read more here: http://www.adn.com/2013/10/20/3134637/a-boom-over-uaa-moves-to-rank.html#storylink=cpy