The path to setting Alaska’s state government budget enters a new phase this week, as both legislative chambers prepare to vote on different versions of the spending plan.
As the House heads into a debate on the budget Thursday, it’s eyeing a proposal that includes a $280 million reduction from last year.
The Senate Finance Committee’s current budget includes $215 million in cuts. But Committee Co-Chairman Fairbanks Republican Sen. Pete Kelly said he’s aiming for a total of $500 million in reductions.
How the committee will get to those deeper cuts isn’t clear. But Kelly said structural changes to Medicaid, criminal justice, and oil and gas tax changes are target areas.
“At this time, if we didn’t make the appropriate reductions, and make government smaller, and better – with the systemic changes built into it – then what we would be offering the people of Alaska is sustainable spending, not a sustainable budget,” Kelly said.
Kelly said the Finance Committee will also propose changes to the Teachers’ Retirement System.
And co-chairwoman, Eagle River Republican Sen. Anna MacKinnon said senators are considering overhauling community revenue sharing. Some rural communities depend on the money from the state to provide basic services.
“Should we let it ramp down as proposed in current Alaska state statute, should we recharge it given the current financial difficulties that we’re facing, or should it be repurposed and totally taken apart and done differently?” she said.
Funding for the Alaska LNG pipeline is an area where there’s a difference between the House and Senate. The House included $10 million for it, but MacKinnon is skeptical. She said the state has enough money to complete the preparations for front-end engineering and design work, known as pre-FEED.
“At this time, I am really not interested in additional funding for that purpose, when we’ve already deployed those assets, and they should be able to reach the completion of pre-FEED,” she said.
The House expects to pass its version of the budget tomorrow, and the Senate could be done with its spending plan on Monday.
That will leave the two chambers a month to iron out their differences before the scheduled end of the session on April 17.
In that time, legislators will discuss new revenue to cover the budget. They will consider a cut to Permanent Fund dividend payments, and adding broad-based taxes like an income tax.
