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Note from Rep. Les Gara
Note from Rep. Les Gara  
Self-Imposed Poverty: Why Budget Shouldn't Hit Seniors, Those With Disabilities, Children
Note from Rep. Les Gara

March 22, 2016

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Dear Friends and Neighbors,

I’ve been buried in work.  Which, of those things you can be buried by, isn’t all that bad I guess.  But it’s kept me from getting you an update (Sen. Ellis and I did provide a legislative update in Fairview last week).

A Struggle To Get All To Work Across Party Lines

By this point I think the legislative session has been a disappointment.  While I think we can afford a society that doesn’t cut help for Alaskans who live with disabilities, seniors, and education, that’s exactly what the budget passed by the legislature has done so far – though I’ll keep battling.  And I think we can work across party lines to do much better.

I believe in principled compromise, especially in the face of big challenges.   I’m an Alaskan before I’m a Democrat.  So far, every Democrat and Independent member budget amendment has been defeated on party lines.  That’s not a sign that people are dying to work together.

Rally for the University

The good news is that I’ve constantly spoken to more moderate Republicans who are willing to work across party lines and, as I’ve said, join me in stepping out of our “ideological boxes” to fix our budget gap.  But so far too few in the GOP leadership (which runs all the committees on the budget, oil tax loophole reform, and other issues) have indicated a willingness to do that.  Maybe they are playing their cards close to their chest.  But time in this 90-day session is running out.  It’s time for people to start working together and dropping ideology.

I’m happy to hold out an olive branch.  I’m not happy to hold one out only to have it lit on fire.

Road To Recession; Harming Seniors, Those With Disabilities and Alzheimer’s Disease, and Those Who Deserve Opportunity

Some legislators still say they can just cut the budget on the backs of seniors, schools, kids, and those with disabilities, and go home saying they did their jobs.  Well how’s that working?  After $700 million in cuts last year (which I supported), Republican leaders, along caucus lines, took the Governor’s $100 million in additional agency cuts to somewhere between $280 million and $350 million in their budgets.  What does that do?  It turns a $4 billion deficit into a $3.85 billion deficit.  That’s harming people for window dressing

That’s also a road to a recession.  At this point, the University’s Institute of Social and Economic Research says every $100 million in budget cuts will cost a state on the brink of, or in a recession, 1,250 to 1,500 private and public sector jobs.  I’m not thrilled with dumping 4,000 more Alaskans out of work, and don’t plan on voting to do that.

Speaking on the House Floor

I’m happy to cut waste.  I’m not happy to cut opportunity and dignity and public safety.  At that point you’ve gone too far, and have to heed every economist and legislative analyst who says that with today’s low oil prices, we will run out of savings in a few years because we cannot simply cut our way out of this deficit.  As much as I oppose the $4.3 million/year Anchorage Legislative Office Building, the $6 billion Susitna Dam, the $2 billion Knik Arm Bridge and other unaffordable projects, the state has halted most funding for the latter projects. I will keep fighting against them. But they are a drop in the bucket compared to a $4 billion deficit.

We need to raise revenue.  If you can’t afford clothes for your family, you go out and get a second job.  Some in this legislature say you just tighten the belt on kids, seniors, public safety, and those with disabilities. We are not so poor that we can’t look out for our children, seniors, students and those with disabilities.

Special Interests Lobbying To NOT Help With Deficit

Mining companies have lobbied to oppose efforts at a more fair mining tax.

Oil companies have lobbied to protect mega-generous tax exemptions, that allow them to pay no Oil Production Taxes on any future fields, and any field since 2002, at oil prices all the way up to $73/barrel.  Oil was at $38/barrel yesterday.

And they have so far successfully lobbied to keep almost all of their generous tax credit payments paid by the state.  While the state is obligated by statute to pay only $72 million in oil company tax credits, it is on pace to pay most of the $800 million in credits due under the current tax credit law.  It is projected that next year will be the fourth in a row where Alaska pays oil companies more in tax credits than we receive back from our weak Oil Production Tax law.   

The alcohol industry, which in fairness already pays the highest tax in the nation, has opposed an increase in alcohol taxes.

The Governor’s Office says they have given up on an income tax in the face of legislative opposition.
That leaves cutting the Dividend by 50% or more (one proposal effectively eliminates the PFD in three years). Those proposals seem to have the most Republican leadership support, and, alone, do not create a balanced plan, don’t solve the deficit, and don’t fairly share the burden between profitable corporations, wealthy Alaskans, and those seniors and others who struggle and rely heavily on the Dividend. That is, a Permanent Fund-only plan is imbalanced, and hits poor, rural, and lower income Alaskans much harder than Alaskans with great wealth. 

I’m keeping my mind open to possible Permanent Fund changes if they are fair, and are part of a balanced, comprehensive plan that solves the deficit, or at least the bulk of it this year.  A fair plan should be balanced between the wealthiest Alaskans, high profit corporations, and not disproportionately hit those with the least wealth and privilege.  When lobbyists for the most privileged in society, who do not need the Dividend, say their clients won’t help with the deficit, and refuse to recognize that the Dividend is 20% of the income of the lowest 50% of wage earners in the state, it stifles principled compromise.  It leaves us in an ugly battle between the haves and have nots.  We can do better than that.  Just cutting the Dividend leaves us on a road to a recession.  A largely incomplete budget plan likely leads to more cuts to essential services, more job losses, more hits to seniors, students and others who shouldn’t carry the burden of this deficit.

I don’t do class warfare and a “cut the Dividend only” plan is incomplete, doesn’t fix the deficit, and isn’t balanced.

The good news is that there are moderate Republicans, Democrats and our one Independent legislator who want to build a fair plan.  The bad news is that we are all being told by too many of those in power, so far, that a plan that is fair to all Alaskans, regardless of wealth, might be off the table.

Some fair mix of most of the above revenue options can vastly reduce the deficit. 

Want some facts?

Here is a link to charts showing state spending has gone down significantly the past three years. Adjusted for inflation, per capita spending is lower than it was 30 years ago.

Here’s a link to a press release showing how low our oil tax revenue is under current law

Here’s a link showing we are projected to pay more to oil companies in state-paid tax credits than we get back in our minimal Oil Production Tax - for a 4th year in a row​. This week the Department of Revenue announced this will happen again next year and in 2018.

That’s where we are.  Unwise cuts to seniors, our Pioneer Homes, low income Senior Benefit payments, help for those living with disabilities, and a growing crisis in our child neglect prevention system, which won’t be fixed by ducking our heads in the sand.  And I believe opportunity matters, and shortchanging the future is penny-wise and pound foolish. That’s why I’ve opposed major cuts to the University and Pre-K education.

Major cuts in these areas are a recipe for a major recession.

Here’s to hoping that my next newsletter brings better news.

As always, feel free to contact us with questions and concerns.

My best,

[signed] Les Gara


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