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Senate passes budget with more for university and a big 'unallocated' cut

  • Author: Nathaniel Herz
  • Updated: September 28, 2016
  • Published March 14, 2016

JUNEAU — The Alaska Senate on Monday afternoon passed its $4.3 billion version of the state operating budget, which slices $63 million, or 1.5 percent, in agency spending from the budget passed by House members last week.

The total would represent a 19 percent cut from the $5.3 billion spent by the state two years ago. But included in the cuts is a $100 million unspecified, "unallocated" reduction proposed by the Senate Finance Committee. Without that unallocated cut, the Senate version spends $37 million more on state agencies than the budget approved by the House last week.

The unallocated reduction is a "placeholder" for cuts that could be made later in the legislative session, according to Sen. Pete Kelly, R-Fairbanks and co-chair of the finance committee. The savings could come through legislation to reform Medicaid that's already passed the Senate and is pending in the House, or by reducing spending on oil and gas tax credits, or by spending less on the state's retirement systems for public employees, Kelly said.

The 16-to-4 budget vote matched the split between the Senate's Republican-led majority, a caucus that includes two Bush Democrats, and the solidly Democratic minority. It came after the majority rejected seven Democratic budget amendments that would have reduced cuts proposed by Gov. Bill Walker and the House and Senate GOP majorities — paid for with money grabbed from things like megaprojects opposed by Democrats, and from reductions in tax credits for refineries and oil companies.

Like in the House, the Senate majority refused to hear a Democratic amendment that would have stripped $150,000 from the Legislature's budget. Majority leaders want to use the money to appeal to the Alaska Supreme Court their lawsuit that seeks to invalidate Walker's expansion of the Medicaid health care program. The case was dismissed earlier this month by an Anchorage Superior Court judge.

Democrats oppose the lawsuit, but their amendment was tabled by majority members in a 16-to-4 vote. The substance of the amendment itself received neither debate nor a vote.

Another budget amendment by Democrats would have reversed a proposal by the Senate majority to cut the $900 million for inflation-proofing the Alaska Permanent Fund.

Including payments for debt and the state's retirement system, the total Senate budget in unrestricted general funds — the typical barometer that lawmakers use for measuring state spending, which doesn't include federal money or spending from a few state accounts — is also higher than the House's, by about $180 million.

But that's only because the Senate elected to use a more transparent method of budgeting than the House. The House's spending plan relied on about $145 million for education that wasn't counted as unrestricted general fund money, as well as about $80 million for the state's retirement system and $25 million for the university that came from other state accounts.

The budget will next go to a joint House-Senate conference committee. There, members will resolve discrepancies between the two spending plans, like the $25 million extra for the state university system that the Senate is proposing above the House version. (The Senate's budget would still cut $25 million from what the university system plans to spend in the current year.)

First, though, lawmakers are expected to take several weeks to determine how to raise the money required to pay for the budget.

The current year's $5.4 billion budget is projected to have a $3.8 billion deficit, and Walker has asked lawmakers to consider fixing the gap with new and increased taxes, as well as money from the earnings of the Alaska Permanent Fund.