Lawmakers continue the battle of the budget in Juneau
Midway through the 90-day session, declining revenues color the agenda
Source: City of Valdez
This graph demonstrates why Alaska's revenues are in decline.
Legislators this coming week will reach the half-way point of the scheduled 90-day session, with the House working toward finalizing its version of the state operating budget and a Senate committee working on a measure geared toward curbing and containing state Medicaid costs.
A bill that would keep Planned Parenthood from providing sex education in schools and restrict how the Board of Regents regulates concealed handguns on university campuses have garnered recent attention. But the Senate remains on schedule with its review of the budget and hasn't lost sight of the focus on addressing the state's deficit, Senate President Kevin Meyer said. The House earlier this month passed a resolution narrowing its attention to budget- and revenue-related bills until it sends the operating budget to the Senate.
Nearly halfway through the session, though, it remains unclear what pieces the Legislature will pull together to tackle a multibillion-dollar state budget deficit exacerbated by low oil prices. In addition to budget cuts, current proposals include taxes, the use of Alaska Permanent Fund earnings, changes to the state's oil and gas tax credit system and changes to Medicaid and the criminal justice system.
Legislative leaders have chosen to focus on the budget before deciding on bills that would provide new or additional revenue, saying their constituents expect them to cut first.
That's not to say there haven't been hearings on revenue options while budget work has been under way; there have been. So far, on Gov. Bill Walker's tax proposals, though, there's been limited movement.
"We're taking a close, hard look at these," said Sen. Mia Costello, whose Senate Labor and Commerce Committee has been assigned four of the tax bills. She said she wants to understand the long-term effects that these might have on the economy.
To address the deficit, Costello, an Anchorage Republican, thinks ultimately there will be budget cuts, action involving the permanent fund and some form of other measures.
Walker has said he tried to be fair in his proposals, which include industry tax increases, reinstituting a personal income tax and changes to the permanent fund dividend tied to his plan to draw money from the fund's earnings reserve. He's also proposing oil and gas tax credit changes, which House Resources has been hearing.
On another front, the Senate has been working on legislation aimed at controlling costs within Alaska's Medicaid program. A chunk of the Medicaid bill being considered by the Senate Finance Committee is focused on ferreting out fraud and abuse.
Rep. Paul Seaton, R-Homer, said the House and Senate have a shared goal to accomplish significant Medicaid reform that addresses better health for Alaskans and saving the state money. Much of that savings to the state would be from shifting costs to the federal government wherever possible, said Seaton, who chairs the House Health and Social Services Committee also working on Medicaid legislation.
Source: City of Valdez
Depressed crude oil prices are bad news to a state that has relied heavily on oil taxes.
Gunnar Knapp, director of the Institute of Social and Economic Research at the University of Alaska Anchorage, told the House Finance Committee this past week that there will be economic impacts no matter how the Legislature responds to the deficit. Failure to make significant headway this year could mean repercussions like a further hit to the state's credit rating. But trying to fully close the budget hole this year could have a big impact on an already-weakened economy, he said.
House Minority Leader Chris Tuck, D-Anchorage, said the committee process is set up to compartmentalize subjects, but that makes it hard to see the bigger picture. It's important to find out what lawmakers on both sides would like to see as part of a fiscal plan, he said.
"We have a strong desire to share the responsibility and the burden," he said. "We're trying to think of every idea we can to foster that along."