Dan's Dispatch: Why We Need a Capital Budget

Last week, I wrote a letter to the editor outlining specific funds in the capital budget allocated to southern Southeast Alaska. District 36 fortunately received millions of dollars for local infrastructure projects. That being said, the state’s overall capital budget is still miniscule in comparison to previous years. Since 2013, it has been cut by over 55%.

You may be wondering, how is it possible to cut the capital budget by more than half? Many of these cuts are not long-term budget reductions, but are instead deferred maintenance costs that we currently cannot fund while in a deficit. We are simply postponing most infrastructure maintenance.

The effects of a nearly non-existent capital budget are starting to show. Buildings and projects that we originally invested millions of dollars into are now falling into disrepair. Roads are riddled with potholes, for example, South Tongass Highway. As these conditions worsen, the costs associated with them increase.

The state maintains over 2,200 facilities and current postponed maintenance costs equals $1.84 billion. Without consistent funding, overall costs are expected to increase, departments cannot plan, and uncertainty leads to emergency-only spending.

The economy is also negatively affected by a small capital budget. Private construction groups have fewer projects to bid on, forcing people within the building industry to find work in other states. ISER estimates that for every $100 million in capital budget expenditures, nearly 1,000 jobs are generated.

Making a fiscally responsible decision dictated that those cuts be made, but with our state’s unemployment level climbing and our deferred maintenance costs rising, we cannot keep cutting the capital budget. If we want working ferries, up-to-code buildings, safe roads, and well-managed state owned lands, we eventually need to revive the capital budget. However, as I’ve stated before, we cannot have a sufficient capital budget without a comprehensive fiscal plan that includes a stable and sufficient revenue source.

For over three years, I have made the tough votes in support of adopting a sustainable fiscal plan, and I’m ready to continue to make the hard decisions and votes during our next special session this October.