Budget director raises issues with House proposals

JUNEAU — As a key House committee worked to finalize its version of the state operating budget, Gov. Bill Walker’s budget director pushed back against some of its proposals.

In a letter to House Finance Committee Co-Chair Rep. Mark Neuman dated last week, Pat Pitney flagged concerns with what she called drastic cuts to areas like education and the university system, a disproportional impact on rural communities and adding money to this year’s budget to artificially lower next year’s unrestricted general fund budget.

The administration has estimated that much of the proposed cuts are unavoidable costs that have been short-funded, covered using money from this year or shifted and will reappear in future budgets, Pitney wrote. That assessment includes money for the public employees’ retirement system, which is expected to be revisited pending an actuarial update; a lack of agency funds for the major gas-line project Alaska is pursuing; and different approaches to university, education and teachers’ retirement system funding, Pitney said in an interview Tuesday.

During the amendment process Tuesday, the committee approved funding for the state-sanctioned Alaska Gasline Development Corp., but not at this time for three state agencies that also requested money for the gas project.

It also voted to restore funding for a state prosecutor’s office in Dillingham, along with money for a public integrity unit proposed by the Walker administration. It reduced the level of cut to public broadcasting.

Besides cuts, Neuman has said that legislators looked for “any little pots of money” they could find to help reduce the use of unrestricted general funds, including taking $24.7 million in excess funds from a program that provides assistance for rural areas faced with high electricity costs to cover part of state costs for the university system. The state’s deficit is in unrestricted general funds.

People might say that will leave a hole next year, said Neuman, R-Big Lake. “Yeah. We’re coming back saying, ‘Next year, the budget’s going to be lower,’” he said in a recent interview.

The committee in a budget draft also proposed putting $80 million into the fund used to pay for state-sponsored scholarships and drawing nearly as much out next fiscal year to go toward the teachers’ retirement system. It proposed taking $435 million in still-available reserve funds this year and putting that into the fund that pays for public education. The Senate is considering similar language.

Neuman has suggested using $145 million of the $435 million in each of the next three years toward the state’s much larger overall tab for education.

On Tuesday, the committee approved appropriating $30 million from funds this year to expand substance abuse treatment services over the next several years. The idea is to fill in gaps in existing services, with a goal of decreasing costs associated with untreated drug and alcohol dependency.

Committee member Lance Pruitt, R-Anchorage, said it’s appropriate to help people in difficult situations like that but also important to be clear with Alaskans about where the money is coming from. He said it “almost seems like we’re trying to play a little bit of a shell game.”

Some committee members expressed surprise to hear during the meeting that $288 million was found in a reserve fund previously thought to have been depleted. That information also was included in budget documents provided by the administration last month.

Rep. Tammie Wilson, R-North Pole, was frustrated with items being added back into the budget after the work done by subcommittees to find areas to cut or change within departments.

“Everything we add back in we’re going to be asking our constituents to now pay for in some type of revenue enhancements,” Wilson said in an interview.

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