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Obama budget cuts into Alaska programs

Erika Bolstad

WASHINGTON -- President Barack Obama's proposed budget for next year calls for a number of spending cuts in Alaska, including up to $10 million in cuts to health care construction overseen by the Denali Commission.

The White House on Monday unveiled a $3.7 trillion federal spending plan for the next fiscal year starting Oct. 1. It's expected to reduce the deficit by $1.1 trillion over the next decade. The budget has $33 billion in domestic cuts, including to programs that are important in particular to Alaskans. Among them: $2.5 billion in cuts to a program that helps poor people pay heating bills, a $1 billion cut to money for community water treatment plants and a $1 billion cut to airports.

The budget also calls for ending an $18 million grant program for rural electric service that serves Alaska, as well as cutting in half a $34 million Bureau of Land Management program that conveys land to Alaska Natives. Another small program that ensures the subsistence needs of rural Alaskans are met would be shifted to the National Forest System.

The Denali Commission, a federal-state agency long championed by former Republican Sen. Ted Stevens, was created to funnel money into infrastructure projects in rural Alaska. It and several of the other Alaska-based programs targeted by the Obama administration have been on the chopping block before, and often get resuscitated as Congress ignores the presidential blueprint when it draws up its own spending plan.

But this year could be different as a Republican-led House of Representatives grapples with how to fulfill campaign-trail promises of reducing the deficit and reining in debt.

In his budget message, Obama told Congress that the fiscal realities will require hard choices.

"A decade of deficits, compounded by the effects of the recession and the steps we had to take to break it, as well as the chronic failure to confront difficult decisions, has put us on an unsustainable course," he wrote.

Alaska's congressional delegation will likely fight hardest to keep the administration from eliminating billions in oil industry tax incentives, a yearly proposal from the president and one that he referenced again last month in his State of the Union speech. The White House said Monday it would plow more than $3 billion in savings into green energy research.

Sen. Mark Begich, D-Alaska, said the incentives may be poorly understood and he will argue they benefit smaller, independent producers based in the United States and interested in domestic energy production. Still, he acknowledged targeted cuts would be necessary. "There's no question that we have to get our fiscal house in order and there are going to be no easy decisions to get down that path," he said. "You have to get the spending and the expenditures under control; you have to invest in things that will grow the economy."

Republican Sen. Lisa Murkowski, who sits on the Appropriations Committee, acknowledged Monday tough decisions will have to be made in advocating for both fiscal restraint and policies that ensure "our interests are treated fairly" in Alaska.

"There is no doubt that spending cuts will be difficult and necessary, but the challenge will be to figure out how we cut spending without wrecking state and local economies," she said. "That's a particularly important consideration for a relatively young state like Alaska, which hasn't gotten the infrastructure support that the federal government has provided to the Lower 48."

Even as it cuts an estimated $1.1 trillion out of the deficit over the next decade, the Obama spending proposal also increases spending for education, infrastructure and research the administration says will lead to job growth and economic recovery. In addition to an ambitious plan to expand broadband access across the country, the budget includes $50 billion for roads, bridges and railways and $4.5 billion for education.

The president's budget director, Jacob Lew, said their spending plan has involved some "tough trade-offs," and that they anticipate criticism about slashing in half such programs as low-income heating assistance.

When asked to justify cutting low-income heating assistance even as the budget grows for programs that boost education and infrastructure spending, he said they'd given it careful consideration.

"It's a program that's done an enormous amount of good for an enormous number of people," Lew said of the heating aid, but added that it also "was never meant to be an entitlement program."

The program was funded at $2.5 billion in 2008 but doubled when energy prices spiked, Lew said. It's now being pared back to a level more comparable to energy prices, Lew said, and more compatible with the austerity they're hoping to impose.

"We can't just kind of cruise at a historic high spending level when we're trying to make these very difficult savings," he said.

Rep. Don Young, R-Alaska, derided the president's proposal, calling it "nothing more than a blueprint for tax increases." The proposed cuts mean nothing "if we don't start producing and growing our economy," he said. He also called the proposed budget cuts "ineffective" attempts that would be borne largely on the backs of rural America. That includes cuts to the heating oil program. If the administration is unwilling to subsidize heating fuel, Young said, then it must support policies that develop domestic energy production.

"We've got an urban president trying to dictate to rural America that subsidies for clean energy are more important than filling their heating tanks this weekend," he said. "The president is long on rhetoric but so far, short on results."


By ERIKA BOLSTAD
ebolstad@adn.com