Senate budget cuts would mean thousands of job losses, but where are the details?

The Alaska Senate insists it wants to cut $750 million from the state budget over the next three years, but its members have failed to give the public a clue about the consequences.

What they won't say is that cutting the state budget to that degree would mean the elimination of 10,000 jobs or more. Most government spending is for personnel and if you want to cut hundreds of millions, there is no choice but to eliminate a great many jobs at state agencies, the University of Alaska and school districts.

This is from estimates provided to lawmakers by the University of Alaska Anchorage's Institute of Social and Economic Research and Northern Economics.

The best way to end the fantasy budget talk in Juneau is to provide people enough specific information to weigh all of the alternatives, which include Permanent Fund earnings, the Permanent Fund dividend, state spending and taxes.

With the potential for thousands of job losses, not to mention reductions in state and local government services, this can't be put off any longer.

The Senate plan to use about $2 billion a year from the earnings of the Permanent Fund, similar to others on the table, would solve much of the state's fiscal problem and cut the dividend to $1,000. Even this would leave a enormous budget gap, running to hundreds of millions a year.

While the Senate says it is not interested in taxes, only in unidentified budget cuts, this should not be an either/or proposition.

Senate leaders are downplaying the impact of $750 million in unidentified cuts, acting as if those can be accomplished without a major disruption to schools, the University of Alaska, the health and transportation departments and other agencies.

They may well try to duck the issue by requiring the agencies to decide what services or programs to cut, a practice that allows legislators to deny any responsibility for what gets cut.

The other day Bethel Sen. Lyman Hoffman said cutting $300 million this year, the first installment on the $750 million, is as easy as cutting a nickel on a dollar.

"The phrase that I've been using at least is that we're asking people to cut a nickel," he told reporters.

"When you're in a crisis mode, asking people that I've talked to, 'Can you cut 10 cents on a dollar?' They said yes for the vast majority of it. Then again we're not asking for 10 cents on a dollar. We're asking for 5 cents on a dollar."

Who can't find an extra nickel? Think of it that way and this is the easiest thing in the world, especially if you don't have to decide what to cut. But it is misleading to an extreme.

The Senate plan for the next three years would require the state to find 15 billion nickels, which will make the recession deeper and longer.

There are fixed costs in every budget, whether it is for a family or a state agency. Try saving a nickel on every dollar of your next mortgage payment or auto insurance bill and see how that works.

Requiring cuts across the board treats every program as being of equal importance, which is way of avoiding politically difficult decisions and creating inefficiency.

There are 927 fewer people working at the university than three years ago, UA President Jim Johnsen told regents Thursday. The next round of nickels extracted from the university will likely cost 160 to 200 jobs.

Rather than accept $750 million in budget cuts, it may be that an income tax would be more palatable to Alaskans, once the consequences are clear.

According to ISER, an income tax that raises $300 million would eliminate between 1,600 and 2,500 jobs. Cutting spending by $300 million through layoffs would mean a loss of from 4,200 to 5,000 jobs.

With state finances at a turning point, Alaskans are unable to judge the trade-offs because the proponents won't acknowledge the economic and social consequences of the plan to cut $750 million.

Columnist Dermot Cole can be reached at dermot@alaskadispatch.com. 

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