Gov. Sarah Palin is calling for more state spending on children's health insurance, preschool and other programs, even as Alaska oil prices and state revenues plunge.
Cash flow into the state is shrinking as oil prices drop below $40 a barrel, the lowest level in nearly four years. Most state general fund money comes from taxes and royalties the state makes from oil. But Palin said the state can afford more than $5 million in new spending on areas like Head Start, obesity prevention, a test program of half-day preschool, and expanded Denali KidCare insurance.
"That means more working families will have health coverage. This isn't done lightly, a decision like this, and we know there will probably be some healthy debate stemming from some opposition in the Legislature over this," Palin said.
Palin will release the rest of her proposed state budget next week and said not to expect any significant cuts. She downplayed the danger falling oil prices pose to the state budget, saying Alaska is in a far better position than other states.
Palin claimed the state could still end up with a surplus even if oil averages $45 a barrel over the next several months.
David Teal, the state Legislature's chief budget analyst, said that is possible for the current fiscal year that ends in June. But he has doubts. "Oil is falling pretty fast; we don't know if we're going to have a surplus or a deficit," Teal said in an interview.
Palin's new spending plan, though, would start in the next fiscal year -- when Alaska oil prices would have to average at least $20 a barrel more than now to balance the budget. The state has put billions of dollars into savings accounts, however, and the governor's office said there is no "imminent threat to government services" even at lower oil prices than this.
Palin's health proposals unveiled Thursday don't come close to the sweeping policy changes proposed by some legislators who are promoting universal health care. The governor established a commission to provide recommendations on putting together a health care plan for the state.
Anchorage Democratic Sen. Bettye Davis said Palin's proposals are a beginning, but not enough. "I'm pleased she is at least admitting we need to move from where we are," Davis said.
North Pole Republican state Rep. John Coghill said he's worried Palin's plan to increase Denali KidCare goes too far in expanding an entitlement program outside the welfare system. He said he'd like a co-pay or some other incentive for people not to rely indefinitely on the state system. But Cogill said he probably would not fight the increase, and expects that it will likely make it through the Legislature.
Lawmakers have scrapped for years over Denali KidCare, which provides health insurance for lower income children and pregnant women. Palin last year opposed the push to increase coverage -- even though the state was enjoying a huge surplus at the time from high oil prices. It's one of dozens of policy calls that came under scrutiny as the governor became a national figure in the wake of her nomination this summer for vice president.
Palin, pressed on why she's now changed her position, kept repeating that it is an opportunity for more children to be covered.
A major issue last year in the debate was that lawmakers feared the federal government might reduce its 70 percent share of the program. There's more certainty now in the federal match.
The proposed increase -- taking Denali KidCare eligibility to 200 percent of the federal poverty level instead of 175 percent -- is estimated to bring about 1,300 children and about 225 pregnant women into the program.
Palin also called for an $800,000 increase in Head Start preschool programs and another $2 million for the state Department of Education & Early Development to try a pilot program for half-day preschool.
The state preschool would include up to 500 children spread around the state. School districts would get the money through grants. The idea is to target kids who do not have access to preschool otherwise, according to state officials.
Palin said some cost savings will come with the end of a teacher performance cash incentive program that the teachers union said was badly flawed.
Find Sean Cockerham online at adn.com/contact/scockerham or call him at 257-4344.