‘The $1.6B problem’: Senators, commissioners gear up for budget challenge

It’s not clear when Gov. Mike Dunleavy’s budget will be released, but budget talks are already dominating conversations at the Capitol.

Two of Dunleavy’s commissioner designees — Commissioner of Administration Designee John Quick and Commissioner of Revenue Designee Bruce Tangeman — sat in front of the Senate Finance Committee on Tuesday and answered a barrage of questions from the senators.

One question, from Sen. Peter Micciche, R-Soldotna, was about the $1.6 billion deficit in Dunleavy’s initial budget proposal and what Tangeman made of that. Tangeman explained that the deficit stems from having $3.2 billion in revenues forecasted (projecting oil prices to be about $64 per barrel), and from former Gov. Bill Walker’s final budget being at $4.8 billion.

Tangeman said oil revenue is projected at about $2.2 billion, and revenue from the Earnings Reserve (via a percent of market value appropriation) is projected at about $2.9 billion. Of that $2.9 billion, Tangeman said about $1.9 billion will go to a full Permanent Fund Dividend package, based on Dunleavy’s proposal. Adding the $2.2 billion of oil revenue to the $1 billion from the percent of market value appropriation gets to that $3.2 billion figure, he said.

[Dunleavy unveils plan for PFD back payments]

Tangeman said he’s a “firm believer” in cutting the budget to the revenue line, and said very few additional revenue streams appear to be available at the moment.

“We are not immediately solving the $1.6 billion problem in the Department of Revenue with a revenue source today,” Tangeman said.

Tangeman made a passing reference during his part of the hearing to Dunleavy releasing his budget on Feb. 13, which is the final day he can do it (the governor has 30 days from the start of session to release his budget). After the meeting, Tangeman clarified in an interview afterward that he had “no clue” when the budget was actually going to come, and that it could come sooner than Feb. 13.

He said he foresees months of “entertaining and interesting discussion” taking place with the Senate Finance Committee.

Quick spoke more briefly, answering questions about his experience as the Kenai Borough chief of staff. The Department of Administration’s roles include administrative services in matters of finance, personnel, labor relations, property management, retirement and benefits programs, information and telecommunications systems, and more.

The Senate Finance Committee members do not make recommendations about the designees one way or another, but will write up a report based on their interviews with the designees to submit to the Senate and House of Representatives. Those bodies will then vote on whether to confirm the designees as commissioners, Senate Finance Chair Sen. Bert Stedman, R-Sitka, said.

The budget will be even more central to the committee’s next hearing, in which Office of Management and Budget Commissioner Designee Donna Arduin will be interviewed at 9 a.m. Wednesday.

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• Contact reporter Alex McCarthy at 523-2271 or amccarthy@juneauempire.com. Follow him on Twitter at @akmccarthy.

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