Politics

With oil savings dwindling, Alaska House begins budget hearings

JUNEAU -- Alaska this year will exhaust the remaining billions in its Statutory Budget Reserve, the state's most readily available savings account, but exactly how far it will have to dip into its Constitutional Budget Reserve next year depends on the ongoing budgeting process.

The key operating budget is beginning to firm up with the beginning of House Finance Committee hearings this week, following a series of sometimes controversial subcommittee budget-cutting meetings that concluded last week.

The House Finance Committee got its first look this week at the totals of the cuts proposed by the subcommittees, with some members saying they'd gone too far.

Republican budget experts say they've made necessary cuts to the budget to reduce the overall "footprint" of state government to well below last year and below what had been proposed by Gov. Bill Walker.

The current legislative budget cuts are about double the 5 percent their calculations show Walker proposed.

The draft budget the House Finance Committee is now reviewing is $239 million below last year, a decrease of 10 percent, said Pete Ecklund, finance aide to Rep. Mark Neuman, R-Big Lake.

That budget is the funding for non-formula agency operations, what most people think of when they think of state government, he said. The cuts are needed to extend the life of state savings accounts, he said.

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"Alaskans are going to have to come to grips with their state government doing less, while more responsibility must be taken on by themselves and their local governments," Ecklund said, presenting the draft budget to the House Finance Committee.

Public hearings began on that budget Tuesday.

Some cuts were made in formula programs but bigger cuts will require legislation, the committee was told.

But members of the Democratic-led minority say the cuts go too far in key programs such as health and early childhood education, as well as threatening to drive the state into job losses and recession.

"The cuts we're making right now are minuscule to the overall deficit we have, so why risk the economy if it's not going to make a significant difference," said Rep. Chris Tuck, D-Anchorage.

The cuts being considered range from a tiny 1 percent of the judiciary to more than 30 percent for the departments of Commerce, Community and Economic Development, Military and Veterans Affairs, and Labor and Workforce Development.

Budget numbers also show a decrease of that magnitude for the Governor's Office but largely from the elimination of one-time items such as the cost of last year's election and the transfer of a domestic violence prevention program to the Department of Public Safety.

An apples-to-apples comparison of the governor's proposed budget with last year's budget shows a reduction of just 2.4 percent, Ecklund said.

The draft budget being reviewed by the Finance Committee also restored some of the money that had been cut by subcommittees. Subcommittees chaired by Rep. Lynn Gattis, R-Wasilla, trimmed from the budget 2.5 percent raises that had been previously approved, and reduced the budget she oversaw by equivalent amounts.

But Neuman staffer Joan Brown told the Finance Committee that the subcommittees didn't have the authority to do that, and the money was restored.

"This was not in the purview of the subcommittees," she said.

Removal of the negotiated raises had been objected to by Rep. Sam Kito, D-Juneau, but subcommittee chair Gattis refused to allow Kito to offer budget amendments. He later took to the House floor to object to that action.

Rep. Bryce Edgmon, D-Dillingham, said the subcommittees made tough decisions when they had to, such as transferring the Trooper Patrol Vessel Stimson to Kodiak in a cost-saving move.

"That was painful to me, transferring Stimson from Unalaska to Kodiak, because Unalaska is in my district," he said.

Ecklund said that following the depletion of the Statutory Budget Reserve this year, the state will likely have to use $700 million from the Constitutional Budget Reserve to balance the current fiscal year's budget.

There will likely be $9.3 billion remaining in the CBR when the fiscal year begins July 1, with current plans calling for spending about $3.3 billion to balance the next fiscal year's budget.

Money from the statutory reserve can be spent with a majority vote of legislators, while a three-quarters supermajority is generally required to withdraw money from the CBR.

"How much of our savings will be used in fiscal year 2016 will be determined as this session progresses," Ecklund said.

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