House passes state operating budget

WASILLA — The Alaska House of Representatives burned the midnight oil and then some Friday to pass an $8.66 billion fiscal year 2017 state operating budget that includes some $639 million in cuts.

The cuts represent a 10 percent reduction from the current year’s spending, according to Big Lake Rep. Mark Neuman, the co-chairman of the House Finance Committee.

The final House vote was 24-14. Some 30 budget amendments were turned down, meaning the final budget was the same measure that passed the finance committee last week. Rejected amendments included proposals to restore cuts to the Alaska Pubic Offices Commission, public broadcasting and state revenue sharing.

“Alaskans spoke clearly — cut first, then look at filling the remaining fiscal gap. That’s exactly what we’ve been doing, this year and last. We’re down 20 percent over the past two years,” Neuman said in a press release. “We’re downsizing government and stretching our reserves.”

The Alaska Senate was expected to pass its version in the coming days. The budget was being debated on the Senate floor Monday. From there, both versions will head to a conference committee to work out the differences.

While the two budgets move toward a reconciled legislative spending plan, lawmakers continue to work on how to pay for it as they wrestle with a $3.8 billion budget deficit. Budget proposals from Gov. Bill Walker have called for a mix of taxes and use of the investment earnings of the Alaska Permanent Fund, while lawmakers also can choose to cover the deficit with the Constitutional Budget Reserve.

“With the current fiscal situation, much more work lies ahead as we continue to rethink the size, shape and functions of government,” Neuman said.

Neuman said the budget, known as HB256, reduces day-to-day government expenses by 10 percent, and overall unrestricted general fund spending by 7 percent.

“We brought our costs down significantly this year,” Neuman said. “The more we reduce spending, the smaller our fiscal gap is between revenues and expenditures. The smaller the fiscal gap, the less we have to take from the Constitutional Budget Reserve fund, or the people of Alaska through one of the governor’s proposed tax bills.”

In figures provided by Neuman and the House Majority, the fiscal year 2017 operating budget totals include:

• $8.659 billion in all funds, $639 million less than last year and 30 percent less than fiscal year 2015;

• $4.084 billion in unrestricted general fund spending for total operations, “including the major formula drivers like education and Medicaid;”

• $1.835 billion in unrestricted general fund spending for “just agency operations, the record-tying 10-percent reduction in day-to-day costs.”

Neuman also said lawmakers should review statewide statutes and other regulations as a way to trim spending.

“Statutes also need to change to address state spending,” he said. “As we reduce spending on government, we have got to reduce statutes and regulations. That’s how we continue to shrink government. Reduce the scope of work required by state agencies and government costs less.”

Contact reporter Steven Merritt at 352-2269 or steven.merritt@frontiersman.com