Republicans offer 'painless' spending cap with hundreds of millions of cuts they won’t even mention

The governor and many Republican politicians in the state House see political salvation in a state spending limit, but they can’t identify exactly what they want to cut from the state budget to live within a spending limit.

There is no need for a spending limit, of course, especially with the House controlled by Republicans who say they want to cut spending and the governor’s office controlled by a man who says he wants to cut spending.

The governor can cut almost anything and knows in advance that it won’t be overruled by the Legislature because it is almost impossible to get a super majority in the Legislature to override a budget veto.

The governor’s office is the real spending cap in the Alaska Constitution.

The Republicans don’t want to say any of this out loud, so they subscribe to Gov. Mike Dunleavy’s lockbox plan for the budget.

The first step is to create a lockbox to limit state spending.

Then, only after the lockbox is safely ensconced in the Alaska Constitution, will you have to tell the public what won’t fit inside said lockbox.

Cutting the budget will be easy then because you will have to, regardless of public opinion, and you won’t be able to raise any taxes.

“It’s a lockbox and then you kind of duke it out, if you need to, what’s inside that lockbox,” is how Dunleavy described his vision of budget nirvana in 2016, a system that would allow everyone to blame the lockbox, not the elected leaders who sold it.

Dunleavy said the lockbox would prevent people from always asking wannabe budget-cutters the hated first question, “What do you want to cut?”

What won’t be in the lockbox of the future? Road maintenance? Health care? Public safety? Schools? Waste, fraud and abuse?

Before we go too far, rest assured that the lockbox scheme stands almost no chance of passing the Legislature this year. That’s a good thing.

But the inability to get this done won’t stop the Republicans in the House from talking it to death.

The latest incarnation of the lockbox would tie the state budget to a percentage of the gross domestic product of Alaska in a convoluted formula that no one will ever understand.

It would be better to rely on the daily horoscope or a bag of fortune cookies to plan our future than to trust that this will meet the needs of Alaska.

In setting the lockbox limit, government spending would be subtracted from the gross domestic product for the calculation. Why?

As far as I can tell, this is because government spending is unproductive, impure and ignoble, while private spending is productive, pure and noble.

The Legion of Lockbox doesn’t put it that way, of course. They don’t have a reason for excluding government spending, other than government spending is not part of “Alaska’s Productive Economy,” according to Rep. Will Stapp’s slides.

Repeating an unexamined and empty phrase does not make it convincing.

The House Judiciary Committee is to consider the lockbox dream at a hearing today, one of the first steps in failing to explain what services won’t fit inside the lockbox.

The bill is from by Rep. Will Stapp of Fairbanks, who has been in the Legislature for 15 minutes and Anchorage Sen. James Kaufman, who came up with this plan two years ago. The plan may move a bit in the House, but not in the Senate.

“Over the last year I’ve been working with economists and some of the brightest minds in our state to come up with a plan that ties our spending to a five-year rolling average of the private sector economy,” Kaufman said in his 2021 promotional video.

The spending cap would exclude Permanent Fund Dividends, the largest state expenditure this year, from the total of state expenditures. Why? Just because.

“A good spending cap doesn’t have to be painful,” Kaufman claims.

Just look at his charts to see why that is wrong.

Two years ago, his chart showed that last fiscal year, FY 2022, would be a painless one under his plan, with spending matching his proposed spending cap for the blue line below.

This is the chart Rep. James Kaufman distributed two years ago for his “painless” spending cap, showing no problem with meeting the spending cap last fiscal year. The blue line matched state spending.

But the new chart for the Kaufman and Stapp plan tells the painful story for this fiscal year.

The new chart, posted below, shows that several hundred million would have to be cut from the budget for this fiscal year. That is a lot of money.

This is the new chart from the spending cap proponents, which shows that the budget in the current fiscal year is several hundred million above the proposed spending cap. The blue line doesn’t match state spending. The sponsors haven’t said what they would eliminate.

The talking points for the spending cap have been updated with a lie, which is that the spending limit is “roughly” what the state is spending today.

Stapp and Kaufman should identify the hundreds of millions they plan to cut now before this bill moves out of any committee.

The Anchorage Daily News had a good piece on the issue this weekend, which included this timely observation from University of Alaska Anchorage economist Kevin Berry: “One of the things that people don’t mention is a spending cap that’s binding, that requires cuts, requires identifying those cuts. So the question is, what are people talking about cutting?”

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