• Forecast
  • News Tip
  • Categories
Temperature Precipitation
Estimated read time
3m 50s

Parnell introduces multi-billion dollar budget

By Rhonda McBride 10:38 PM December 12, 2013

General fund budget is $5.6 billion, down $1.3 billion from the current fiscal year

ANCHORAGE - Despite some of the troubling news, Gov. Sean Parnell was upbeat as he rolled out his 2015 spending plan Thursday before the Anchorage Chamber of Commerce — an audience that generally supports cutting funds.

The state’s budget cycle runs from July 2014 to June 2015.

Parnell told chamber members his general fund budget is $5.6 billion, down $1.3 billion from the current fiscal year.  The total budget, if you include the Permanent Fund, federal money and other funds, is at $12.4 billion. It was $12.8 billion a year ago.

Aside from a smaller budget, Parnell is projecting a $1.1 billion deficit. However, he told the chamber there’s no reason to panic because he will use a mix of cuts and budget reserves to help guide the state through leaner times.

The governor said he will find savings by trimming 150 jobs. The good news is those positions have gone unfilled, so they will cause relatively little pain. He also wants to pay down pension fund debt by drawing $3 billion from savings. This would lower the state’s annual payment.

At a news conference at his Anchorage office, Parnell chastised reporters for not understanding the importance of this proposal, which he announced earlier this month.

“I think you have underplayed the historic opportunity that we have of working across the aisle here with the pension obligation,” Parnell said.  “It would be akin to Congress and the president making the Social Security system sustainable over time. From a state’s standpoint, this is about as significant as it gets.”

Democrats support the concept. In fact, they’ve suggested it before. But they worry about rapidly shrinking budget reserves, they said.

If you add the $2 billion shortfall for the current fiscal year, $1 billion for next year and $3 billion for the pension fund payout, this would amount to about $6 billion in reserves needed to cover deficit spending.

This could be the biggest draw on reserves in the state’s history, said Sen. Hollis French, (D) Anchorage.

“I think we’ve got a long-range crisis coming,” French said.

Republicans look at it differently.

“I give the governor high marks because he’s looking long term,” said senate majority leader John Coghill, (R) North Pole. “He’s looking at how we make sure our budgets are sustainable into the future, knowing full well we’re not going to turn around our oil flow, but we can slow the decline.”

Democrats found irony in the governor’s eagerness to tap reserves. They credit the old tax structure under ACES, Alaska’s Clear and Equitable Share, for helping to grow the state’s budget reserves to $17 billion. ACES is designed to capitalize on high oil prices, and Democrats claim the new tax structure under SB 21 — one that the governor fought for — won’t be able to replenish reserves.

In spite of a smaller budget, the governor found a way to increase funding for public safety. He added $3.4 million for 15 new Village Public Safety Officers and one Alaska State Trooper. Education funding remained relatively flat, although the governor included $5 million for a digital teaching initiative.

Democrats want the governor to raise the education funding formula to help school districts struggling with increased costs, deficits and teacher lay-offs, they said.

“What’s happening to kids in this budget is not good — losing teachers, losing education opportunities,” said Rep. Les Gara, (D) Anchorage, a member of the House Finance Committee.

Gara also said he was disappointed the governor did not implement recommendations from the state’s own child abuse prevention study.

“That’s a problem,” Gara said. “That’s bad for kids.”

But the senate majority leader doesn’t believe increasing funding for schools will help.

“We’re looking for policy solutions as well as dollar solutions,” Coghill said, who believes the governor is of the same mind. “I can tell you we can’t keep doing it the same old way.”

The spending plan for the 2015 fiscal year is the governor’s fifth budget, one he believes has benefitted from the experience of his commissioners and staff, who have learned to find inefficiencies. The governor also gave credit to the Republican majority for backing him in his efforts to cut the budget.

Democrats said the governor is in deep denial about the decline in state revenues, which they believe will be exacerbated by the demise of ACES and the implementation of SB 21, which they are attempting to repeal.

The August primary referendum guarantees that the merits of the two tax structures will continue to be in the backdrop, as lawmakers begin to tackle the governor’s spending plan.

Latest Stories

  • News

    Murkowski expresses concern about North Korean cyber hack

    by Lauren Maxwell on Dec 19, 22:31

    Sen. Lisa Murkowski said Friday she is very concerned now that the U.S. has established a link between the North Korean government and a recent hacking attack against Sony. The senator said the Secretary of Homeland Security, Jeh Johnson, considers the cyber attack a  national threat. “This hacking is directly linked to North Korea, there’s […]

  • Lifestyle

    VIDEO: Minnesota climber begins solo ascent of Denali

    by John Thain on Dec 19, 21:45

      TALKEETNA - Climbing season on Denali is long over, but for Lonnie Dupre, it’s just beginning. The 53-year-old Minnesota man is attempting to be the first person to summit it alone in January. It’s his fourth attempt after trying similar expeditions in 2013, 2012, and 2011. The closest he came was just over 17,000 feet […]

  • News

    ‘Shop with a Cop, Shop with a Firefighter’ brings Christmas cheer

    by KTVA CBS 11 News on Dec 19, 21:28

    For many of Anchorage’s homeless kids, interactions with police officers or firefighters happen during less-than-happy times. A local program called “Shop with a Cop, Shop with a Firefighter” aims to change that. Now in its fifteenth year, the Friday event gave 50 kids the opportunity to go Christmas shopping with a partner in uniform. Everything […]

  • News

    Neglected sled dogs find new homes

    by Shannon Ballard on Dec 19, 20:24

    A few weeks ago, the Anchorage Animal Care and Control Center seized 12 hungry dogs from musher Dario Martinez’s kennel: Martinez had disappeared and was later found dead of an apparent suicide, police said. On Friday, some of his dogs were healthy enough to find a new home. The line formed outside AACCC well before […]

  • Weather

    Weekend weather, Dec. 19

    by KTVA Weather on Dec 19, 19:54

    Kenai Peninsula and Prince William Sound Mostly cloudy skies and dry throughout Southcentral. Southeast Mostly rainy from Sitka to the south with snow for Skagway. Interior and North Slope Partly cloudy skies. Wind in the southeastern areas by Delta Junction. Slope areas will be cloudy with some flurries on and off. Mat-Su Valley Partly cloudy […]

  • News

    Willow fire displaces Iditarod musher, dogs

    by KTVA CBS 11 News on Dec 19, 17:39

    An Iditarod musher, her husband and dogs were temporarily left out in the cold after a fire destroyed their Willow home Friday. Neither Jaimee nor Justin High were home when the blaze broke out, and the 24 sled dogs kept at the property were unharmed by the fire. For now, the couple is staying with […]

  • News

    Federal court puts gray wolf back on endangered species list

    by CBS/AP on Dec 19, 15:38

    A federal judge on Friday threw out an Obama administration decision to remove the gray wolf population in the western Great Lakes region from the endangered species list — a decision that will ban further wolf hunting and trapping in three states. The order affects wolves in Michigan, Minnesota and Wisconsin. The U.S. Fish and […]

  • News

    Bomb threat delays T-Bird Classic

    by KTVA CBS 11 News on Dec 19, 15:06

    East High School was briefly placed on lockdown — then evacuated — following a bomb threat Friday afternoon, according to the Anchorage School District. School was not in session Friday, but the T-Bird Classic basketball tournament drew dozens of high school athletes and spectators to the high school gym. Heidi Embley, a spokeswoman for the […]