Thursday, May 21, 2015

Starving the Beast While Feeding the Piggies (and robbing the bank)

Petting party (pic from the Juneau Empire)
I hope that no one is surprised. Republicans have long been enamored with the concept of cutting taxes to the point that there is no money left for basic government functions to exist. it's called Starving the Beast. Witness Kansas and Louisiana, two states that have recently tried this approach and are sinking into deficits so great that schools are shutting down early and basic government services are being cut as massive tax breaks are being given to the wealthy and to corporate sponsors.  

And now it's happening in Alaska. 

The Republican controlled majority under the previous governor, rammed through massive reductions in the money we sell the oil that the state owns to the petroleum companies. And to make matters worse, these same 'fiscally conservative' politicians gave their employers (the oil companies) production credits that will exceed the revenue we get from selling the oil by $650 million over the net two years at the current rate. We are paying the oil companies to take the oil the state owns! 

The mess has led to a $3.2 Billion deficit for the upcoming fiscal year. Mike Chenault (owns an oil service business) and Kevin Meyers (employed by Conoco Phillips) have not been able to come up with a balanced budget and their only solution has been to blame the Democrats. Why, because they need the support of the Dems to access the $9 Billion in the Constitutional Budget Reserve. And the Dems say that we should get our priorities straight by cutting funding for pork projects like the Susuitna Dam, the Knik Arm Bridge, the TajMahawker LIO building in Anchorage and maybe reduce the hundreds of millions we are paying the oil companies for taking our oil. (Read Chris Tuck's take on it all here).

But the Republicans are doing what Republicans do. Cutting education, refusing to help out the working poor in need of health care, cutting public TV and radio, rescinding negotiated pay raises (but gladly taking their own excessive per diem) and etc. And making the oil companies and their cronies richer and richer.

And now, maybe they have an endgame: to raid the Permanent Fund. They don't need the 2/3 vote of the combined house and senate to tap into this. It will be interesting to see if they have the balls enough to do this. Of course, they will blame the Dems, just like they have blamed the Dems for the current mess. It's easier to blame the innocent than take responsibility.

It will get interesting if they do that.

Wednesday, May 06, 2015

Micciche, Olson, Chenault and The Republican Legislature: Playing Hooky, Cutting Class and Passing Gas

OK, I suck at graphic design, but you get the point.
Their one job as legislators is to pass a real budget, you know a balanced one that lasts through the fiscal year. But the best the Republican controlled majority could do is come up with a lame budget with only enough money for a few months and would still fall some $3 Billion short of what was needed to fund government for the remainder of the year.

That was after some drastic cuts to public school education (in addition to draining  $1.3 Billion from the Forward Funding of Education Account), a $30 million cut from the university system (that will result in the elimination of up to 500 jobs - how's that for job creation!?!), and rescinding pay raises for state workers that had already been negotiated.

What it didn't cut were millions of dollars set aside for various boondoggles such as the Knik Arm Bridge, the Road to Nowhere in Juneau and the Susistna Dam.

And thanks to the new oil tax scheme, the state now pays more in oil production credits than it gets from per/barrel oil revenues - about $100 Million more. The Republicans have refused to look at tweaking those credits so that Alaska actually earns money for the oil we own, rather than pay the oil companies for taking it away. Yes, I do realize that the oil companies do pay other taxes (property, pipeline, etc), and I do realize that at the current low prices, SB21 charges the oil companies more than ACES would have, but thank goodness ACES was in effect for the previous years as it padded the state's coffers and made these trying times a bit easier to deal with. If SB21 had been in effect before, we'd be tapping the PFD AND paying a state income tax about now.

These three Kenai Peninsula legislatures, especially Chenault and Micciche have been the driving force that has driven the ship of state up on the rocks of fiscal irresponsibility. Olson, well, he just does what ever Mike Chenault tells him too.

One didn't need to be an accountant to see this fiscal cliff coming. Why last year, even in this lame blog, it was pointed out that oil production wasn't going to be anywhere near where these three (and then Gov S Parnell) predicted. Despite the warnings, Micciche (on the finance committee) voted for the new LIO remodel job (a no-bid deal with a friend of another legislator)and we now have the Taj McHawker, the hugely expensive and unneeded office space.

Gov .Walker ordered the legislature to stay in session and figure out the budget (and to pass Medicaid expansion), but the Republican controlled house and senate thumbed their noses and voted to take a 2-week vacation rather than do the job they were elected to do.

The one solution is to negotiate with the Democrat Minority and tap into the $10 Billion Budget Reserve (thanks to ACES). But the Dems say they will only do so if some education cuts are restored and that production tax credits are re-visited.

And that's where we are today.

Large Visitor Globe