Dear Neighbors:

On Saturday Senator Ellis and I will be in Anchorage to hear from you and discuss the legislative session. We’ll have pizza and time to listen to your thoughts. We hope you can come from 3 to 5PM at the Fairview Recreation Center, located at 1121 East 10th Ave.

Now, sit down. Here’s what’s happening in your state Capitol and what we are fighting to repair. And at the end I’ll ask for your input, and share some words from the great, late Governor, Jay Hammond, who I agree with in times like this.

Oh, and for color you might as well know about this week’s completely unconstitutional bill that is taking up my time – it would lead to the logical conclusion that any state can steal away any federal land it wants – maybe the U.S. Mint, and destroy the economy; or maybe Pennsylvania could steal the Liberty Bell, and sell it to the highest bidding billionaire? Popular politics, but illegal and a waste of millions of dollars we will lose when the law is declared unconstitutional in court. At some point we have to recognize we are Alaskans and Americans, and that we have an oath not to violate the U.S Constitution. We are still negotiating about roughly 50 million acres of land that the Feds do owe us – which is fair play for a bill. But like it or not, no state (including Alaska) has the right to demand all federal land in their state.

Currently we are living with an oil tax that will give oil companies $500 million more in the next two years than we receive. It is one that says any field after 2002 pays so low a tax rate that we get a long term near zero or negative net present worth. That, combined with very low oil prices, has turned the surpluses from our prior law into a $3.5 billion deficit.

Here’s the secret rub. According to the non-partisan Division of Legislative Finance, Alaska could fire every state employee funded by Unrestricted State General Funds, and only cut half the deficit. You can’t cut $3.5 million without firing our Troopers, child abuse investigators, state road maintenance operations, and the basic services the state provides. So this game of pretending we can cut to solve the deficit is fiction.

Responsible Budget Cutting: Waste Instead of Senior Payments, Eliminating ALL State-Funded Pre-K, Avoiding Teacher and Educator layoffs; Protecting Abused and Neglected Children

So, what can be done? The Governor proposed a $250 million cut to agencies. I have also proposed similar amounts – and a bit more. And the House GOP has proposed slightly larger cuts. But here’s the rub: folks can talk about continuing to cut all they want, and waste should always be cut – as should unaffordable non-priority projects like the state’s money-losing Kodiak Rocket business, the $2 billion Knik Arm Bridge and the $6 billion Susitna Dam.

But the House GOP cuts hit deep, at children and schools and job training, and at a sustainable economy. They ended ALL state funded Pre-Kindergarten education in Alaska, putting Alaska into at least a tie for last place in Pre-K education. They closed the state’s oil and gas job training center, which aims to get more Alaska hire on the North Slope and on any future pipeline. They have severely cut K-12 education funding.

I and Democrats proposed cuts a bit larger than the Governor’s budget, but with his principle that we should cut while giving the economy a soft landing, so we don’t spin Alaska into unemployment and recession. We proposed our cuts while recognizing that Pre-K increases graduation rates, college attendance, earnings, and reduces criminal costs. Roughly 40 states have statewide Pre-K. And we found wasted money and put that towards an education plan that stops a long course of teacher and job counselor cuts across the state.

There are smarter ways to cut. Then there are mathematical ways that don’t fully consider human and economic consequences, and that cause real harm to jobs, schools, and the most vulnerable Alaskans.

And that leaves the question of where we are. Under all three approaches we likely run out of the money that was once $17 billion in savings we built under our former oil tax law ACES (which I proposed should be amended, improved, but not thrown away as was done in 2013 by Governor Parnell in favor of the law we have now) in two to three years.

Here are some questions I have for you.

Jay Hammond and I became friends in his later years. Former Governor Hammond said in times of fiscal crisis, we should first get a fair share for our publicly owned oil resource. You hit the Permanent Fund Dividend last. Why? The Alaska Constitution says we should get the “maximum benefit” for our resources. And taking $500 in dividends from the poorest person in Alaska, our seniors who can’t make ends meet, and many who, especially in rural Alaska use the dividend for food, fuel and clothing hits those people way harder than it hits someone who makes $100,000 a year, or even more than a million dollars a year. One family gets crushed. One doesn’t even notice what is a minor imposition to them. It is why lower income people oppose Dividend cuts, and higher income people want them.

So, while I think the priority is to reconsider our oil tax that produces negative revenue, you may not agree. I’d like to hear your thoughts:

1) Do you support an oil tax that gets Alaska a higher share for our oil?

2) Do you support an income tax?

3) Do you support a sales tax (it displaces local government’s ability to impose local income taxes)?

GOP leaders have filed a bill to spend the principal of the dividend. It hasn’t had a hearing.

I’ve been walking offices to see if there is support to revisit flaws in an oil tax law that is producing negative state Production Tax revenue in the next two years, and the Governor raised this as an issue in a January Op-Ed.

Medicaid Expansion: Why I Voted to Support It, The 4,000 Jobs It Will Bring, and The State Savings It Would Create to Help Shrink the Budget Deficit

Here’s why Medicaid Expansion works, and has the support of the normally ultra-conservative Chamber of Commerce. And here’s the possible poison pill that may kill this effort.

First the good news.

Expansion brings in $145 million, and then up to $200 million a year in federal funds that will ripple through a contracting economy.

It uses Federal funds to replace state spending, reducing our budget deficit. That, with the Medicaid reforms proposed by the Governor’s Office will save over $100 million in state spending through 2021. In large part this is because the Federal Government will now pay for medical services the state pays for, including for adults up to 138% of the poverty level who have no children. Current Medicaid doesn’t cover childless adults. And it will expand funds available for alcoholism, drug abuse and mental health treatment.

But while I voted for the Governor’s proposal to put this in the budget (so it could not be blocked), the GOP blocked it from being included in the budget. So yesterday the Governor filed his own bill. The history is that the GOP majority has blocked Medicaid Expansion bills the past two years from coming to a vote. And this bill can be blocked from a vote by any GOP committee Chair who is hostile to it. That’s why I supported passing it as part of the budget.

That’s the Juneau Report for now.

Johnny and I hope to see you Saturday! And to hear from you.

My Best,

[signed] Les Gara