If the Alaska Senate gets its way, Alaskans can expect fewer teachers, less ferry service, fewer criminal prosecutors, fewer Alaska State Troopers and a much lower Permanent Fund Dividend in 2018.
On Thursday night, the Senate formally voted 15-5 in favor of a spending plan that cuts $276 million from the state’s operating budget. According to figures from the Legislature’s nonpartisan Legislative Finance Division, schools spending will be cut $55.3 million from the current fiscal year. Health and Social Services will lose $49 million. The University of Alaska will lose $34.5 million.
One thing that wasn’t cut at all was the state’s subsidy of oil and gas drilling. Drillers are expected to be eligible this year for more subsidy payments than the state earns from production taxes.
The annual Permanent Fund Dividend, the most expensive line in the state budget, will take the biggest hit.
Without action by the governor or Legislature, the dividend is expected to be about $2,300 this year. The Senate’s budget takes that to $1,000.
“These are trying times financially for the state of Alaska,” said Sen. Lyman Hoffman, D-Bethel and the member of the Senate Majority that drafted the budget.
Hoffman said that as bad as those cuts are, Alaska’s savings accounts are running low, and failing to cut would lead the state deeper into recession.
“The alternatives of doing nothing are even more scary than any of us could even imagine,” he said.
Alaska has a $2.8 billion deficit, and the Senate’s proposal is one of two in the Legislature to address that issue. In the House, lawmakers have proposed a budget with much fewer cuts — including to the dividend —but the House’s proposal would be paid-for with an income tax and some of the earnings of the Permanent Fund. The Senate, meanwhile, is planning years of budget cuts and the use of the Permanent Fund as well.
Even if the Senate’s plan is put into place this year, Hoffman warned, Alaska will still have a $685 million deficit and require additional cuts. The House’s plan would eradicate the deficit within three years with no additional cuts.
Voting against the proposal Thursday were all five members of the Senate’s Democratic minority and Republican Sen. Mike Dunleavy, R-Wasilla, who defected from the majority to vote “no.”
Due to a voting error, Dunleavy’s “no” vote was not tallied in the final sum.
Sen. Bill Wielechowski, D-Anchorage and a member of the minority, blasted the spending plan as “the absolute most regressive tax” on Alaskans because it cuts the dividend equally for rich and poor recipients, and it asks nothing from out-of-state workers.
“We’re not asking them to pitch in a dime,” he said.
Sen. Bert Stedman, R-Sitka, said there’s no doubt that lawmakers would prefer to not cut the budget, but they have no choice.
“There’s a little bit of pain in it for everybody in every region of the state,” he said.
Before the final vote, minority Democrats offered 20 amendments on various portions of the budget. Only two were accepted. Both restore funding to schools programs and amount to less than half a million dollars in total.
All substantial amendments were defeated, including attempts to restore the dividend to its full amount and to reverse Gov. Bill Walker’s last-year veto of half the dividend. The majority refused to allow a vote on either amendment; both were tabled.
Thursday’s vote allowed the Senate to have its say, but it will not have the final word. The budget next returns to the House, which is expected to reject it outright.
When that happens, the House and Senate will form a small committee to iron out the differences in the proposals. That process that will be complicated by the fact that the budget bill only talks about how money will be spent — it says little about where that money will come from.
Contact reporter James Brooks at james.k.brooks@juneauempire.com or call 419-7732.
