Future Federal Spending in Alaska Uncertain
FAIRBANKS/JUNEAU - The state faces an uncertain future with federal funding as Washington, D.C., continues to grapple with the fiscal cliff, sequestration and general spending woes.
That was the message from a presentation given to the House Finance Committee on Tuesday afternoon. Alaska and local governments could expect to see between 18 million and 37 million fewer federal dollars for certain programs if automatic spending cuts, known as sequestration and part of the so-called fiscal cliff, go through.
The presentation was given by Federal Funds Information for States Deputy Executive Director Trinity Tomsic.
She said most of the forecasted $2.7 billion in federal spending the state expects to receive during the current fiscal year, 76 percent comes from programs that are exempted from the automatic spending cuts.
According to Tomsic, if sequestration goes through, Alaska could expect to receive $18 million less than last year from non-exempt programs. Exempted programs would grow by an estimated $77 million.
While that may paint a relatively safe picture for Alaska, Tomsic said many of the programs and spending not touched by automatic spending cuts could be cut through the normal budgeting process.
“If you’re looking at 2013, you have to look at the sequester, but also the budgeting process and the fiscal cliff,” she said.
The exact impact for Alaska for this year and in future years will be hard to predict, she said.
“I think the bottom line is that states are going to face more uncertainty, and they’re going to see more uncertainty this year more than normal,” she said.
Her presentation only covered non-military spending affected by the fiscal cliff, not tens of billions of dollars of federal military spending that could have a big impact on the military focused economy of the Interior.
Interior Rep. Steve Thompson, R-Fairbanks, said the presentation quelled some fears about this year, but left him with more questions about the future of the state’s financial relationship to the federal government.
“It looks like maybe this year we’re not going to be in bad shape,” he said, “but it doesn’t explain how we’ll look in the next two or three years.”
He said the Legislature will have to take a hard look at which federally funded programs it can maintain.
“If we don’t receive that money, what’s it going to do to our budget? If the federal government’s not going to give us the funds, are we going to quit that program or are we going pick it up out of our legislative budget reserve?” he said. “That’s the big questions.”