Here are the five biggest issues to be resolved on Alaska’s state budget

(KTOO file photo)

Six state lawmakers met for the first time Tuesday to begin hammering out a budget to send to Gov. Mike Dunleavy.

The budget conference committee is aiming to finish its work in time for the House and Senate to pass the budget by the scheduled end of the session on May 15.

The Senate members are Sitka Republican Bert Stedman, Anchorage Republican Natasha von Imhof and Golovin Democrat Donny Olson. The House members are Nome Democrat Neal Foster, North Pole Republican Tammie Wilson and Wasilla Republican Cathy Tilton.

The two chambers are much closer to each other in their budget proposals than Dunleavy’s budget is to either of theirs. But there are significant differences, beginning with what to do about Alaska Permanent Fund dividends.

Here are the five biggest differences:

  • The Alaska Permanent Fund
    The House left the permanent fund dividend for another bill. But the difference between what the House budgeted for state government and the revenue the state expects would allow for a dividend of roughly $1,200. The Senate passed enough funding for a full dividend of roughly $3,000. But that would require spending about $1.2 billion in state savings beyond the amount planned in a law passed last year. If the state were to repeatedly make unplanned draws in savings, it would likely reduce the value of the permanent fund. In addition, the Senate budget would transfer $12 billion from the fund’s earnings reserve — which the Legislature can spend if majorities vote for it — to the fund’s principal, which is protected under the state constitution. The House passed an $8 billion transfer in a separate bill.
  • School bond debt reimbursement
    The House budget would reimburse municipalities about half of the amount the state has traditionally covered on the debt from the bonds issued to build and maintain schools. The Senate would pay the full amount to municipalities totaling $100 million, a $50 million difference from the House.
  • The Department of Health and Social Services
    The Senate budget cuts $55 million deeper than the House, although neither cut as deeply as Dunleavy proposed. The biggest Senate cuts compared with the House are in Medicaid, mental health and addiction treatment and recovery grants, and cash aid to needy, aged and disabled Alaskans. The two chambers differ on how confident they are that the administration will achieve spending reductions as quickly as it projects. House members are concerned that if these savings don’t happen, the state will have to increase spending next year through what’s known as a supplemental budget bill.
  • The Alaska Marine Highway System
    The House would cut the ferry budget by $11 million. But the Senate would go much deeper, cutting $29 million more. Both chambers would maintain funding for ferries through next June, while Dunleavy’s proposal would end funding in October.
  • The Department of Corrections
    The Senate budget would spend $25 million more than the House on corrections. The Senate would provide more money for population management and inmates’ health care.

Both chambers’ versions of the budget are significantly different from Dunleavy’s proposal. He will have a chance to veto all or part of line items once the budget reaches his desk.

The biggest difference is over education funding — the Legislature wants to continue funding set by a law passed last year, while Dunleavy has proposed $324 million less than both chambers. Dunleavy also proposed funding the university budget by $124 million less than either chamber. The governor also proposed eliminating all funding for public radio and TV. The Senate proposed a small cut to public media, and the House proposed no cuts.

 

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