Monday, November 7, 2016

Where have we heard this before -- oh yeah, from the same people ...

Two pieces in last week's Alaska Dispatch resulted in a big sigh ("a long, deep, audible breath expressing sadness, tiredness, or a similar feeling") as we read them.

The first was an article reporting on a Facebook post by soon to be (but not soon enough it turns out) former Senator Lesil McGuire. Anchorage Republican senator attacks one of her GOP colleagues running for re-election, https://goo.gl/9kL7Jw.  The second was an op-ed piece by current Senator Cathy Giessel. Sen. Cathy Giessel: Sustainable budget is Alaska's top priorityhttps://goo.gl/3duk09.

The reason we sighed at the second -- Senator Giessel's piece -- was mostly because we had heard it before from her -- in 2012 to be exact.

In a press release announcing the formation of a new majority caucus following the 2012 election, where the Republicans ousted what had been a disastrous Bi-Partisan Senate Majority ahead of it, Sens. Giessel, McGuire and others identified their "Top Three Areas of Focus."  The third was this:  "Develop sustainable capital and operating budgets for current and future generations."  https://goo.gl/niydts

Sounds familiar, doesn't it.

The fact is, the reason the claim still sounds fresh is because in the four years since the R's haven't gotten the job done.  In her op-ed piece, Sen. Giessel claims that in the four years since the 2012 election the legislature has "reduced the budget to levels last seen nearly 10 years ago," but the fact is that is only in one category of the budget, and then only if you accept certain accounting tricks employed last year to make even that number appear lower than it was.  See An exchange with Rep. Mark Neuman on the #AKBudget,  https://goo.gl/p5aIuo.

While the R's have reduced state spending in some areas, that progress largely has been offset by a tsunami of cash oil tax credits which have engulfed the budget in the meantime.  And as Chair of the Senate Resources Committee Senator Giessel has been right at the center of that particular disaster -- which isn't over yet.

According to the Administration's forecasts, even with the so-called "reforms' passed this last session, Alaska state government -- and through it, Alaska's citizens -- still remain on the hook for nearly $1.2 billion in accumulated cash credits coming up in FY 2018 alone, and continuing cash payments out the door even beyond that.  In total, the program is expected to cost the state nearly $6 billion through FY 2025.  https://goo.gl/uDwqYk at 12-13.

To put that in perspective, that is nearly 15% of the current principal held in the Permanent Fund.

Had the amount been invested alongside the Permanent Fund principal instead of in the form of cash credits, the amount already would be producing significant financial returns for Alaskans with more to come long into the future.

Instead, the few incremental royalty and tax revenues thus far generated by the resulting production have not even covered the program's costs, much less produced a return.  Because of the time delay alone, on a net present value basis -- the way that investors measure the relative returns of two competing opportunities -- the cash credit program never will produce a value greater than Alaskans would have realized if the money simply had been invested alongside the Permanent Fund instead.

In short, continuing that program has not progressed Alaska toward a sustainable budget; instead, it -- and Senator Giessel's continuing support for it -- has made the budget even more unsustainable.

We also sighed at this passage in Senator Giessel's piece:
Alaska's future demands a broader discussion of revenue to preserve basic government services. I welcome that deliberation. At the same time, the private sector has lost thousands of jobs with more expected. I am not willing to put your house payment at risk to fund a government that still needs to make reductions.
Yet, the fact is "putting [Alaskans] house payment at risk" is exactly what Senator Giessel -- and other Republicans -- voted to do this past session when they passed SB 128, the bill which permanently would have cut (or what those in favor prefer to say, "restructure") the PFD.

According to the University of Alaska-Anchorage's Institute of Social and Economic Research, cutting the PFD is the "most regressive" of all the state's fiscal options.  Short-run Economic Impacts of Alaska Fiscal Options,   https://goo.gl/ZxR1Hw at A-12 ("The reduction in the PFD is the most regressive of all [the fiscal options].")

That means on a percent of income basis cutting the PFD takes the most of all the fiscal options out  of the paychecks of lower and middle income Alaskans -- the very ones that that struggle the most to meet their house payment.

Indeed, according to another recent ISER study, it is an approach also that, standing alone, pushes between 12,000 -15,000 Alaskans --  2% of the population -- that are currently above, back below the poverty line.  Permanent Fund Dividends and Poverty in Alaska, https://goo.gl/iuTjv2 at 14.

That is not taking steps that avoid putting "your house payment at risk;" instead, voting for SB 128 was the one thing that was the most likely to do exactly that -- and that is the very step she chose.

Recently, Senator Giessel has indicated support of a bill by Senator Dunleavy that would reverse the Governor's one-year PFD cut implemented earlier this year by veto.

At first some, including us, took that as a sign that Senator Giessel was admitting her earlier vote for SB 128 was a mistake, which at least would have made her claim to be concerned about "house payments" less hypocritical.

But turns out, it wasn't.  According to the Chairman of the Alaska Republican Party, the concern had more to do with the way in which the Governor had made the PFD cuts, not the substance of the action. So, after all that, what is the R position on cutting the PFD???, https://goo.gl/AJ802T.

Senator Giessel was even more direct about the issue on her campaign Facebook page.

Alaska needs a real solution for our fiscal issues, not the money grab pushed through by Governor Walker.
And what would have been the right solution?

Re-Elect Senator Cathy Giessel A solution would have been to apply the grabbed $1000 to the budget shortfall. ...


In short she is upset not because the Governor cut the PFD, but because he didn't apply it to something else government related when he did. 

Our frustration with soon-to-be-former (but not soon enough) Senator McGuire is similar.

As reported in the Alaska Dispatch News, McGuire lashed out last week at Anchorage Rep. Lance Pruitt over his vote against SB 128 when it reached the House Finance Committee.  https://goo.gl/9kL7Jw  There, Rep. Pruitt, along with fellow Republican Reps. Lynn Gattis, Dan Saddler and Tammie Wilson, and Democrat Reps. David Guttenberg and Scott Kawasaki formed a bi-partisan majority effectively to kill the bill.

In her post soon-to-be-former (but not soon enough) Senator McGuire claimed that Rep. Pruitt voted as he did over re-election concerns, suggesting that to do so reflected a "lack of leadership."

In our view, though, Senator McGuire is the one that has lacked leadership, or indeed even a basic understanding of the state's economics.

As note above, even at the time Senator McGuire cast her vote for SB 128, the Legislature already had been advised by ISER that doing so would have the “largest adverse impact on the [overall Alaska] economy” of all the state’s fiscal options. Short-Run Economic Impacts of Alaska Fiscal Options, https://goo.gl/ZxR1Hw at A- 15 (March 2016).

Yet, she did it anyway to help bail out some of her friends and supporters whose entire business models have come to depend on government spending at the expense of average Alaskans. See Alaska's Crony Capitalism, https://goo.gl/zTHwvS.

Understanding that, it becomes clear that soon-to-be-former (but not soon enough) Senator McGuire's rant simply employed the diversionary tactic often used by those caught red-handed --  accusing others of the things of which they are, in fact, the guilty party.

While we haven't always agreed with Rep. Pruitt, he is right on this issue and displayed both courage under fire and leadership in casting his vote to help kill SB 128.  See, "Why We are Supporting Lance Pruitt in East Anchorage House District 27", https://goo.gl/OkI73B.

As for Senator McGuire, fortunately soon she finally will become a forgotten footnote in Alaska history.