Mat-Su Republicans speak about the state budget

The Legislature is in a tough spot on the budget. The House Finance Committee is having a hard time writing a spending plan is in balance with income and also pays a very large “full” Permanent Fund Dividend, or PFD.

To balance the budget, it will have to be reduced sharply or else the PFD will have to be trimmed substantially. Legislators are being criticized for adding to the budget and creating a $600 million-plus deficit from the revenues available.

But others point out that most of the proposed increases have come from Gov. Mike Dunleavy in budget supplementals and amendment he has submitted to the Legislature.

However, Republican lawmakers, including those in the Mat-Su legislative delegation, say the only way out of the problem is to cut.

“I don’t see an appetite (in the state House) to cut the budget,” said Rep. Kevin McCabe, R-Big Lake. “We’re being asked to fund a BSA increase and a new Defined Benefits pension. Where’s the money going to come from? We can’t just print money. We’ve got to live within our means.”

“We’ve seen this coming for a long time. Our CBR (Constitutional Budget Reserve) was $15 billion. Now it’s just under $3 billion,” McCabe said.

Rep. DeLena Johnson, R-Palmer, said: “I’m on the Finance Committee and I can see that our budget is way out of balance. I’ve been in the (House) Majority, and I know it’s hard, but we’re here to help,” meaning the House Republican Minority.

“A $1,000 BSA (Base Student Allocation for schools) increase just isn’t possible,” Johnson said. “We have a multi-billion-dollar deficit, and we’ve got to cut back. It’s not an easy conversation. You just can’t have everything you want.”

Will Stapp, R-Fairbanks, said: “Our (projected) oil price is already below the spring forecast. Our investment return outlook (for the Permanent Fund) is poor. We will have to draw from the CBR to fund the (current year) FY 2025 deficit.”

“We need to look at how we do the budget,” Stapp said. “We should go to ‘zero-based’ budgeting department by department. We can’t do the entire executive branch this year, but we can make a start.” Zero-based budgeting means doing each department from the ground up,” justifying the additions.

However, the Legislature is past Day 80 of a 121-day session. Time is running out for big structural changes, so where can cuts be made?

“Here is how I would do it,” Johnson said. “I would start with all the additions made this year, and then go back and look at additions made last year. I would cut any ‘pilot program’ authorized this year, and look at any new programs created. Of course, we can’t cut public safety or corrections, so this is a lot of work.”

Stapp said he recognizes schools need more money, so he would look at last year’s appropriation of $174 million outside the BSA, the school funding formula, so the money isn’t built into the ongoing budget. He also said a “full” Permanent Fund Dividend may have to be revisited in a world where oil prices might drop to $50 a barrel.

“The numbers don’t lie, and I believe in a balanced budget. We’ve got to do some hard things, and go to the voters and sell it.”

However, education is important and Stapp said he was one Republican who voted to override the governor’s veto of school funding last year. But overall, “we’ve got to start somewhere. This train is going nowhere fast,” he said.

McCabe said he believes in a “full” PFD because it would be a tremendous stimulation to the economy. “We should let people decide how they want their public dollars spent, rather than having some agency decide it,” he said.