Local legislators weigh budget balance

WASILLA — Valley legislators said they would take a pair of scissors to Gov. Bill Walker’s budget plans before they would ask voters to reach for their checkbooks.

The proposed budget cuts approximately $100 million in expenditures from the FY 2016 budget, and Walker touted roughly $1.3 billion in cuts made since the FY 2015 budget. After the proposed cost-saving measures, planned government expenditures starting on July 1, 2016, stand at $4.8 billion.

Among local cuts: the proposed budget doesn’t contain any capital funds for the ongoing development of the Port MacKenzie rail spur, potentially threatening the borough’s plans for long-term development. However, the budget proposal does include about $2 million for the loss-prone Mount McKinley Meats plant, and municipal revenue sharing has been boosted to a total of $150 million, according to borough lobbyist Jon Harris. The majority of cuts don’t directly impact locally, but do affect services that local residents use, Harris told the Mat-Su Borough Assembly on Tuesday.

“The Legislature and the Governor and everybody on the state is tasked with trying to figure out how to balance the budget, and on whose shoulders or necks or whatever do we balance it on,” he said.

Cuts made so far don’t go deep enough, legislators said, though they were cagey about there they would precisely cut. Most said they needed more time to review the proposal before making suggestions.

“It’s certainly a first start,” said Sen. Mike Dunleavy (R-Wasilla). “It’s an initial budget. I don’t think it goes low enough in indentifying reductions.”

Plummeting oil prices are to blame, not legislators, Dunleavy said.

“We’re looking at 35 bucks a barrel for oil,” he said. “It’s not going to be pretty. As I said to one reporter the other day: if you think we can get out of this with little cuts, that’s not mathematically possible.”

Dunleavy joined Sen. Bill Stoltze (R-Chugiak/Mat-Su) in calling for a return to constitutionally-mandated needs, and said zero-based budgeting — a process of constructing an annual budget from scratch, instead of incremental additions or reductions — should be on the table. Stoltze was also critical of Gov. Walker’s claims that government employee cuts could trigger a recession, saying steep reductions in capital budgets had already impacted the construction market to the tune of 15,000 fewer jobs.

“I care about the state employees in my district,” he said. “They’re doing pretty important jobs, but we have a singular preoccupation with them. That pain isn’t being shared and we can’t afford it. Those people that didn’t work construction this year thought they made a pretty big sacrifice.”

House budget committee chair Rep. Mark Neuman (R-Big Lake), co-chair of the House Finance Committee, offered the clearest picture of where he saw potential opportunities for cuts. He suggested consolidating the Alaska Department of Labor and Workforce Development with the Department of Commerce. Among other things, Neuman said he would consider eliminating the Commercial Fisheries Entry Commission, scaling back regulatory efforts in the state, and shifting civil court proceedings in some communities to tribal organizations instead of operating them with state funds. Higher education programs that allow Alaskans to attend schools out of state to the tune of $17 million could also be reduced, he said. The Alaska Energy Authority could be shuttered, since the type of large capital projects it represents — like the Susitna-Watana Dam — aren’t likely to break ground without resurgent oil prices.

“The public wants to see further reductions in state operations,” he said. “They want to see a government that’s a whole lot smaller. We’ve been growing for 57 years. Last year was the first year we made some good reductions. We need to continue down that road a little further.”

Stoltze, whose district contains the Mount McKinley plant, also suggested the time had come to move the state’s only full-service slaughterhouse to the private sector. That’s been tried before without success.

While legislators uniformly supported spending reductions, they differed considerably on possible new forms of revenue.

For example, Rep. Shelley Hughes (R-Palmer) said she was willing to consider using the Permanent Fund’s Earnings Reserve for government operations — provided dividends and inflation-proofing were taken care of first.

“I’m okay with using some of what’s left to help pay for pay for the essential services,” she said.

Hughes also said she thought government expenditures in the neighborhood of $4.3 billion or $4.5 billion were more reasonable than the governor’s figure. To get there, she’d reformulate Medicaid and shift some road maintenance to local governments, and look hard at education spending, which is also slotted to increase under the governor’s budget.

“I don’t think it’s time to be adding funding right now,” she said.

Most legislators rejected an income tax, saying they preferred a sales tax, like Sen. Charlie Huggins (R-Wasilla).

“I would prefer there be a sales tax, if there’s going to be a tax,” he said. “Number one, everybody pays. With an income tax, 50 percent — plus or minus — don’t contribute.”

A sales tax can be more easily adjusted, said Rep. Wes Keller (R-Willow)

“Maybe don’t tax food,” he said. “You can fine-tune it.”

The easy cuts have already been made, Keller said.

“That really has been answered a little bit already,” he said. “Last year, the first thing we did, the low-hanging fruit is the capital budget. It’s a process. This is why it’s a heavy load. It’s not as fun as it used to be.”

Contact reporter Brian O’Connor at 352-2270, brian.oconnor@frontiersman.com, or on Twitter @reporterbriano