During a December visit to Nome, Representative Neal Foster gave a presentation on Governor Mike Dunleavy’s FY’21 budget proposal. In this episode of KNOM Profiles, Representative Foster will discuss his approach to the upcoming legislative session and potential ways to balance the state budget. He also weighs in on his per diem payments, public services in Western Alaska, and PFDs.
Foster: I’m Representative Neal Foster and I represent House District 39, which a lot of folks ask me what does House District 39 look like? It includes the entire Bering Strait as well as the Lower Yukon which would be villages like Hooper Bay, St. Mary’s and Emmonak. And then over into parts of the Interior, just west of Fairbanks, so for example Galena, Huslia, Koyukuk, Ruby…
KNOM: That’s a big area…And you’ve been in office for ten years now, right? This is your ten-year mark?
Foster: That’s correct. I was appointed in October of 2009 and my first session was 2010 so 2020 will technically be my 11thyear, but I’ve done ten so far though.
KNOM: Let’s start there, I wanted to get your thoughts on how things have changed for you in the Legislature since then or what you’ve noticed in House District 39 over the last ten years…
Foster: Sure. When I first came onboard in 2010 our budgets had surpluses, and we had large capital budgets. Everybody was going after ‘what can we go down to Juneau and get in terms of money for projects that we want?’ Those were some really great days…
The price of oil, while production has been coming down gradually over the years, the price of oil was pretty high. For a while it was over $100 a barrel. Today it’s around $64, so it’s pretty low and production is also low so that means we don’t have all the extra money that we did for capital projects.
And right now I’m the co-chair of the finance committee on the House side and I write the state’s budget on the operating side for the House, but prior to this I was also the co-chair of the capital budget and there was a time when we were pretty powerful, you hand out a billion dollars, $1.5 billion to everybody, all the different House Districts, you spread that around. And now there’s almost no money to give out and we’re fighting to protect the services that we have here and that’s the big change we’ve seen over the years.
KNOM: So how did you fare in the majority in this last Legislative session, as the co-chair of the finance committee and you were also co-chair of the budget?
Foster: Right, so you’ve got two co-chairs of the finance committee on the House side, one has the operating budget which takes care of the everyday expenses for the state. And the other one is the capital budget, that would be construction of roads, buildings, and so forth, and I’m in that position. And I think you might have been alluding to the special position of speaker pro tempore. What happened there is the two sides in the Legislature, when everyone was elected last fall and we came in to try to organize but there was a split out of the 48 members of the house. The votes kept coming down to a 20-20 split for whose going to be the speaker and we were deadlocked for a while. The other side put up one name and we had put up one name, and I had actually supported the person who made this all possible, someone from Soldotna, to put their name forward to be the temporary speaker until we could figure everything out. But at the last minute they said ‘you know that person who jumped over from the other side, they’re not going to get any support from that side and therefore maybe we should put your [Neal] name forward,’ so they did.
The thing that I’ve always prided myself in at the finance committee when I had the chairmanship of the capital budget, I tried to treat everyone fairly and I think folks saw that and they knew I wouldn’t try to pull anything. So anyways I served as the Speaker for about a month and it really was a privilege because it was a demonstration to me that all the things I had tried to do right, people had trusted me for that and that was really nice.
KNOM: What’s your thought process when you go into trying to balance all the needs within such a huge district like House District 39?
Foster: So, in terms of the interests that we have within the district, I would say we are pretty coherent and consistent. There are folks who wanted to see maybe a lot of cuts, but I think by and large our district is very reliant…The state plays a great influence in terms of what happens in rural Alaska because it provides a great deal of public services whether it be teachers, or DOT jobs, or guards at the prison, court personnel or folks at Fish & Game or whatnot.
In terms of taking that to the other level, which I think you’re also asking, and that is trying to balance that with other districts. Trying to get all of the Legislature, 40 representatives, 20 senators and one governor to agree on anything is like herding cats. There are so many options out there to solve this budget that it could be 50 or 100 different options out there and everyone has a different opinion on how that should be done. And so it requires a lot of compromise, and to me it requires that you face the reality of the situation that you’re not going to get everything you want and you’ve got to compromise. And in our situation, unfortunately we want fewer cuts but there are other districts that want a lot of cuts, so you have to give and take a little bit. We may have had to give here and there but I think by and large people, they were pretty happy at the end of the day, because we put a lot of pressure out there to have a governor reconsider a lot of the vetoes he did. We put forth a second bill to restore a lot of those vetoes and a lot of those things affected our district a lot, for example removing the entire $1-billion from the Power Cost Equalization Fund, removing senior benefits, removing $130 million from the University system, we have the Northwest Campus here, so all kinds of things.
KNOM: With the special sessions we had, the Legislature trying to meet in Wasilla, failing, and then meeting in Juneau, and you having to travel everywhere for your job, could you explain why you claimed so much per diem?
Foster: So how it works is you claim it per day… as long as you’re in Juneau. During the regular session it’s automatic and during the special session you turn in a form that’s says I was here these days…Well it gets to a point later in session where everybody is at a standstill, all the sides are saying I’m not going to budge and we send everybody home, because there is nothing to do for everybody. But as the operating budget chair, you can’t leave because you’re in negotiations with the Senate and the Governor. So anyways, that to me is based on when you’re there and I’m there all the time. The other issue is: how are we going to move forward?
There is the salary compensation board that has been looking at this (per diem), and it’s not just for the Legislature, they’re supposedly nonaffiliated with the Legislature because they also set pay for a number of positions across the state, and so their job is to try to figure out what’s fair and what’s not. On the one hand people see the numbers and they think ‘what the heck is going on here?’ and other people say, right now a lot of folks say, we don’t want our Legislature to be a bunch of retired people who can afford to be down here versus somebody who is younger and has ideas but they also have a family with children. And so, there’s that debate that goes back and forth, but whatever the compensation board wants to set, it goes by the number of days when you’re in Juneau. And I’m in Juneau all the time.
KNOM: You’re still going into this next session with a deficit (in the state budget) you’re looking at $1.5 billion, so you potentially need to find money elsewhere. That could include new revenue sources like taxes or that could be reaching into savings…What are you more in support of?
Foster: What the Governor wants to do is: last year he proposed a full $3,000 dividend but in order to get that full dividend he has to make cuts at $1.6 billion and there was a lot of public opposition to that because people didn’t want to see services cut to the extent they were. By the way, we’ve cut the state budget by 42% since FY’13. So, folks say ‘why don’t you just cut the budget?’ and we’ve cut it a lot and our revenues have come down so substantially, our oil revenue, by like 84%. We’ve made some adjustments over the years, one of them being this Percent Of Market Value (POMV) which is just taking some of the earnings that the Permanent Fund gets, to the point where we are getting pretty close to a balanced budget with last year’s dividend of $1600. But the governor said last year that he wants a full PFD and in order to get that he needs $1.6 billion so he proposed the cuts. Folks around Alaska said we are not comfortable cutting one-third of the entire budget in one year, and so this year he said ‘okay, I’m not going to make any cuts now, but I need $1.5 billion to pay a full PFD from our savings.’ We’ve got $2-billion left in our savings right now, however he’s going to come to us in the next two months with a supplemental request because he thought he was going to save a lot of money on Medicaid, he didn’t so he’s going to request some money for that. We have a shortfall on oil projections, we thought we were going to have $200 million more than we did. So, you start adding those up and you take the $2-billion we have in savings, if you were to give the governor the $1.5 billion, and then you come in with the supplementals he’s going to request, that almost wipes out your savings. So, then the question is ‘can you get by?’
If you’re a person who’s living pay check to pay check for example and you don’t get paid for two weeks and you’ve got to pay for your food, you have to have some level of money in your checking account. And this is the same situation for us, we can’t have our checking/savings account at zero because you’ve got to pay your monthly bills. And that’s going to be the question we’re going to face in the Legislature, is, can we do this? And if we do it, what are we going to do to pay for it?
If you want to pay for it, your options are you either make cuts, you dip into savings, or you raise additional revenue. Well we’ve made cuts at 42%, we’ve cut $3.3 billion from $7.8 billion budget, that’s a very substantial cut, and there really isn’t much more to cut. You saw the reaction from the public this last year. So then if you don’t do cuts, then the other option is to go into savings. Well, this would wipe out the last of our savings so there wouldn’t be anything left. So, then the question is do you look to additional revenue and that would be like income tax, changing the oil tax structure, or doing a statewide sales tax. I personally don’t like that and a lot of folks in our district have told me they don’t like that because a gallon of milk costs more here than a gallon of milk in Anchorage and if a statewide sales tax is 3% well then, you’re getting taxed more for that same product here in Nome than you are somewhere like Anchorage. So that’s a discussion we’re going to have.
To get to your question on where I stand on all of this: I think there’s no one thing that can do it all, the problem is so big that I think you have to do a little bit of everything. So, we have to continue to make incremental, more scalpel-like cuts versus using an axe and just making big massive cuts without really thinking about the impacts.
We need to have for our district the biggest PFD we can get, but at the same time we also need to have as much of the public services that we can get, and that’s a balance. And what exactly that number is I couldn’t say because there are some people who want the $3,000 dividend and there are some who say I want $2,500. So there all these different numbers and you have to try to balance that with trying…like if it means we are going to get the Power Cost Equalization program wiped out, well I’m not for that. And in terms of if we have to go to new revenue, I’ve gotten a lot of feedback from a lot of people that they’d be okay with an income tax, and it works out great for our district because, according to the Juneau Empire, they compiled information in a bar chart that showed all forty house districts, which ones have the lowest per capita income and which ones have the highest. And House District 39, our district, had the lowest. A lot of folks thought it was going to be the Bethel area, but it was actually our area and it’s Nome, all the villages in the Lower Yukon, the Interior and the Bering Straits…So we’ve got the lowest income in the state and it (the income tax) would least affect our constituents.
KNOM: One of my last questions for you Neal, with the mention of income taxes, oil taxes, or statewide sales taxes, any of those; they’ve failed in the past. Every time they’ve been brought up they haven’t gotten too far (in the Legislature). Do you think that conversation is changing in the Legislature for this upcoming session?
Foster: It is. A year ago, I couldn’t have said this, but it is absolutely changing. Before, the folks who were maybe in south-Anchorage and folks that had a higher income level, those districts were adamantly opposed to any additional revenue. And it could be oil taxes, because maybe a lot of folks in some of those areas had businesses that were subcontractors with the oil industry, and so they were absolutely opposed to any new (taxes), whether it’s income tax or changes to the oil tax structure. Now you’re hearing the same people say ‘we recognize that this needs to happen, we don’t want it to be today, but maybe in the next year or two it could be a very serious conversation.’
It’s going to be a serious conversation this year because the folks who want it will make sure that doesn’t fall off the radar. But right now I don’t see the Senate (passing it)…two years ago we passed an income tax in the House and it failed in the Senate and the Governor would most certainly veto something like that right now.
KNOM: That’s it for me, was there anything else though you wanted to highlight, something we didn’t talk about?
Foster: I just wanted to make sure folks knew that if they have any issues, we encourage people to contact my office. You can go online, or I put out my report in the Nome Nugget when we’re in session and the contact information is there. If anyone has any issues you can contact us because our job is to help folks whether it’s an issue with our PFD or they need help navigating the bureaucracy of state government, or they’ve got ideas for legislation, and probably most often the thing we hear back from folks is about the services they don’t want to see cut. So anyway, I just want to encourage people to reach out to us if there are any concerns at all.
Image at top: Rep. Neal Foster paid a visit to Kawerak’s Head Start in Nome recently. Photo from Neal Foster’s office in 2019.(https://www.facebook.com/Repnealfoster/photos/a.503301273209843/1267951046744858/?type=3&theater)