Rep. Neal Foster delivers talk on budget

Representative Neal Foster of Nome delivered an hour and a half presentation Monday night on Governor Mike Dunleavy’s Fiscal Year 2021 budget, which the governor unveiled last Wednesday.
Twenty-seven citizens were at Old St. Joe’s to hear what Foster, who is co-chair of the House Finance Committee, had to say about the budget.
The governor’s FY 2020 budget sent shockwaves through the state last year. It slashed $1.6 billion from the state budget, a full one-third, surprising most Alaskans with the severity of the cuts. Education funds were reduced by $325 million, a loss of 20 percent. The City of Nome took a $1.7 million dollar hit and the Bering Strait region lost $7.6 million. The Nome Youth Facility was forced to close and the Power Cost Equalization Fund was eliminated, but was restored when the legislature had its say. By the time the dust settled – actually it hasn’t really settled yet – much of the funding had been restored or partially restored, but the shock to the state maintained enough of its power to produce an effective movement to recall the governor. The governor also did not deliver on his campaign promise to pay out a full PFD.
This year’s budget, which totals $4.532 billion, takes a different approach. Representative Foster suggests the governor might be making “a chess move” with the 2021 budget. “No chess was involved last year,” said Foster. “Instead of using a scalpel he used an axe.” The governor proposes in the FY 2021 budget to pay out the full Permanent Fund Dividend of approximately $3,170 per eligible Alaskan. A key element of the new budget is it dips into the state’s savings account for $1.5 billion, which leaves only half a billion in reserve.
In the past eight years the state has run at a deficit. Oil revenues have declined 84 percent in that time and expenses have been cut 42 percent. The savings account has dwindled from $14 billion to the present $2 billion. Permanent Fund earnings were used to fill the deficits.
Foster described how reductions to the capital budget are increasing what is already a huge backlog of deferred maintenance. “This year he’s not going for the cuts but he’s going after the last of the savings we have,” he said. “That is going to create a lot of problems from a cash flow standpoint. It’s not doable so we’re going to have to figure it out.” The capital budget pays for infrastructure improvements such as clean water and village health clinics. “But then there were other areas where people would say something like ‘Why is Anchorage getting these tennis courts?’ for example. A lot of the less critical spending has been cut but at the same time important projects have been cut as well. “And we’re not doing deferred maintenance,” said Foster. “There are things we should be paying for right now but because of this austerity we can’t.”
 When introducing the FY2021 budget on Wednesday the governor stated that no state services or programs are being cut. Dunleavy proposes that spending be increased for four agencies, which deal with public safety, namely the departments of Corrections, Law, Public Safety and the Court System. Fifteen troopers would be added for rural Alaska and 20 unfilled trooper positions would be filled. Dunleavy also proposes to restore Medicaid spending after last year’s cut of some $150 million. The Pioneer Homes would get an increase in funding of 18 percent.
 “This budget sets priorities,” said Governor Dunleavy as he introduced the new budget. “But these aren’t just my priorities, these are the things folks across Alaska told me, and told you over the past year. This budget recognizes the need for a broader conversation with Alaskans and the Legislature about what we desire from our state government.”
“Yes, we fully funded education,” he continued. “But I’m not accepting a dollar amount as a measure of success for our kids and teachers. Reading, and the push for academic excellence, aren’t line items in this budget, but those are what we’re focusing on. More on this to come. Alaskans deserve better outcomes for the dollars we invest.”
Does Rep. Foster think Dunleavy is more timid with the new budget because of the backlash he generated with last year’s? “I think that was the initial response for a lot of folks,” said Foster. “But maybe there’s more to the story. He may be wanting to drive savings to zero which will require one of two things. Either you have to raise additional revenue, which he knows there’s no support in the legislature for right now, or it means the legislature will have to make cuts, and that will put pressure on us. The initial response people had is ‘We did make a difference.’ But I think this also might be a chess move. He’s thinking not just over this year but next year, too. He has another three years as governor. This is only his first year in office. He’s got three more to go. He might be thinking a little farther down the road.”
The Majority Caucus, of which Foster is a member, meets Thursday to discuss strategy. “I’ll be presenting the budget the governor rolled out this past week. To start the conversation, we’re going to try and get a sense of how we want to deal with it. I suspect we’re going to have a minority that still wants major cuts, we’ll have a big part of our group, mostly the Democrats, are going to want to restore a lot of this money, knowing full well the governor will probably veto it, but you’ve got to at least try because at the end of the day maybe you can negotiate something. Then you’ll have some people who want to make some cuts but very reasonable, very incremental cuts. And that’s where I see this going.”