Smoke & Mirrors: Counting to Seven

(1/24/09) On Thursday night during her State of the State Speech, Governor Sarah Palin told Alaskans that her fiscal year 2010 budget was proposed with a seven percent reduction in the operating budget.

"I had proposed we start with an overall reduction of seven percent from last year’s expenditures. This is a real reduction, not just a reduction in the rate of spending increases – as cuts are often defined elsewhere. That’s transparency in budgeting."

There's an old saying about budgeting; truthful budgeting starts with being truthful about your budget.

Anchorage State Representative Mike Hawker, Co-Chair of the House Finance Committee was a guest on my radio show on Friday and he cleared the room of the smoke for us on the seven percent figure.

The governor's so called 7% decrease is due to the fact that she is factoring in the $760 million dollars the state sent out as a one time resource rebate to all Alaskans, as part of the base operating budget.

The rebate which was $1,200 for each pfd recipient, was a one time appropriation. Using the one time payment in the base calculation of the budget for the purpose of falsely claiming you are cutting the operating budget is completely disingenuous.

Not only is the Palin administration falsely claiming that the budget will decrease general fund spending by 7%, they're spending money - this time $238 million from the Alaska Housing fund - but not accounting for it in their budget calculations.

In addition, on May 23, 2008 when Palin signed the fy2009 budget, her press release promised she'd cut an additional $20 million out of the fy2009 budget during the course of the year and deposit the savings into the Constitutional Budget Reserve.

"In signing the bill, the Governor committed to saving at least $20 million in state agencies’ operating budgets.

“This administration takes its fiscal responsibility seriously,” Governor Palin said. “Especially during this time of extraordinary revenue, we must be responsible stewards of Alaska’s resources to prepare for the future.”

Commissioners are developing strategies to achieve this savings target within the budget beginning on July 1. Savings achieved during the fiscal year will roll into the Constitutional Budget Reserve fund at the end of FY2009."

But the truth is there has been no cuts proposed so far for the fy2009 budget, let alone the $20 million she promised. In fact, a quick glance at her fy2010 budget, shows the operating budget actually increasing by 4% according to Rep. Hawker.

One potato, two potato, three potato....seven.