Brennan: Let employees downsize government

By Tom Brennan

If neither the Legislature nor Gov. Bill Walker can bring themselves to cut the budget enough, let’s impose a hiring freeze on state jobs.

We may want to exempt law enforcement and health-related positions, but all other jobs should be frozen and kept frozen until attrition shrinks state hiring rolls and programs enough to reduce government to something smaller, something we can afford without imposing new taxes.

When state employees retire or quit, their jobs should not be filled. Let each agency and department reallocate and reprioritize its responsibilities and carry on with whatever workforce remains. Some state programs and services would be eliminated or downsized as the fiscal situation changes.

The unions will be unhappy but since few if any of their members will lose their jobs, they may be willing to go along. No doubt grumpily but they might be able to live with the freeze.

Imposing and maintaining such a hiring freeze would mean living with a significant (though declining) deficit for a number of years. That would almost certainly have to be filled by drawing down reserves, notably the Earnings Reserve Account.

At last count the Earnings Reserve had a balance of $12.8 billion and was scheduled to receive another $4.4 billion next month in distributed earnings from the body of the Permanent Fund. That pot holds a total of $65.3 billion (including the Earnings Reserve). That is a nice nest egg and dipping into it on a regular basis could enable the state to keep its books balanced while we move toward a government we can afford.

Would government be affordable if we had fewer employees and smaller/fewer programs? I’m no expert but it certainly looks that way to me. It might take a few years to balance the books. There are currently about 18,000 people on the state payroll, not counting the university system and several unique state-funded agencies. The total payroll is something above a billion dollars a year.

Even if the state employee workforce were reduced by a quarter — which would be a substantial cut — that would only save something like $250 million in salaries. That wouldn’t go very far in reducing the deficit, which in recent years has been running from $2 billion to $2.25 billion a year. The governor’s total proposed budget for this year was $4.6 billion, and revenues were projected at $2.6 billion, so big changes are needed. But it is theoretically doable.

The beauty of such an approach, if it is going to work, would be that as employees retire or quit their co-workers would either have to reduce and reallocate each department’s workload or take on the work of the departed employees themselves. The remaining employees would be motivated to become very creative in deciding what is really important and what functions can be reduced or eliminated.

There are many hard-working people in state employment, and I know some of them. Those workers are largely not responsible for the size of the budget. That was built during years when oil revenues were huge, often more money than our government leaders could find ways to spend. The largesse flowed to state coffers when throughput in the trans-Alaska pipeline was at peak and oil prices were far higher than they are today. And state government leaders found ways to spend most of it — surprise, surprise.

But we can’t afford that size government any more even though higher revenues seem to be in the offing. State cash prospects look good from oil projects already approved or underway on the North Slope and possible state money from development of the 1002 Area of the Arctic National Wildlife Refuge.

Such new revenue sources are unlikely to reach levels like those of the glory days, so we must find a way to afford whatever government we choose to provide. And choose we must. That means reducing the size of state government to something we can afford with the revenues we expect to have. And that would simply mean cutting state employment, programs and services to a level that we enjoyed just a few years ago, before the big money came our way.

Since the recommendations for cutting services, programs and positions would come primarily from state employees — the people closest to the problem — we are very likely to receive many good recommendations.

There are possibly flaws to my logic, but I think the principle of such an approach is sound. And there needn’t be any change to determining the size of the Permanent Fund dividends.

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