• 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

  • Politics

    Gov. Walker to attend Trump inauguration

    by Liz Raines on Jan 18, 20:55

    Gov. Bill Walker will be among the governors in attendance at the presidential inauguration on Friday. The Republican-turned-Independent did not make public his support for candidates in the 2016 presidential campaign. Katie Marquette, spokesperson for Walker, said that as an Independent governor, Walker is committed to working with any presidential administration for the good of […]

  • News

    Bethel police: Napaskiak man dies from injuries sustained in snowmobile crash

    by KTVA CBS 11 News on Jan 18, 20:13

    A Napaskiak man died after a snowmobile crash on Friday morning, Bethel police report. The Bethel Police Department announced the death of 28-year-old James Joekay Jr. in a Facebook post about the crash. BPD and the local fire department responded to a report about the crash around 8:30 a.m., police wrote. They found Joekay with his snowmobile […]

  • Weather

    Temperatures drop to record levels, school canceled

    by Melissa Frey on Jan 18, 20:11

    As temperatures dropped Wednesday, new records were set in Alaska. Most of the Interior dropped to 50 to 60 below zero, including McGrath, which saw some of the coldest temperatures in five years. The official thermometer dropped to 53 degrees below zero, cold enough to cancel school. The principal of the school said 50 below […]

  • Lifestyle

    Providence hospital first in Alaska to install NICU webcams

    by Lauren Maxwell on Jan 18, 19:40

    Parents who’ve had a baby spend time in the neonatal intensive care unit (NICU) of a hospital often say how difficult it is to be separated from their child, even for a short period of time. That’s one of the reasons Providence Alaska Medical Center has become the first hospital in the state to install live-streaming […]

  • News

    Maintenance crews dig out thousands of hydrants after snowstorm

    by Heather Hintze on Jan 18, 19:08

    Maintenance crews are digging out thousands of fire hydrants after the weekend snowstorm. Alaska Water and Wastewater Utility (AWWU) is responsible for clearing about 7,400 hydrants around the Anchorage Bowl. Journeyman Marshall Kennon said he can shovel out up to 50 hydrants a day. That involves clearing a 6-foot diameter around the hydrant, then checking […]

  • Politics

    Watch Live: Gov. Walker gives 2017 State of the State address

    by KTVA CBS 11 News on Jan 18, 18:40

      State of the State Address Wednesday, Jan. 18 at 7 p.m. Watch live coverage of Gov. Bill Walker’s remarks from the Alaska State Capitol in Juneau. (Video will begin shortly before 7 p.m.) Web stream provided by 360 North/Gavel Alaska.  

  • Sports

    Grades cost 2 UAA Seawolves the rest of the women’s basketball season

    by Dave Leval on Jan 18, 18:23

    The University of Alaska Anchorage women’s basketball team is in Seattle. However, two players did not make the trip with the Great Northwest Athletic Conference (GNAC) leaders who will play at rival Seattle Pacific University Thursday. Their seasons are done. Junior guard Kaitlyn Hurley and junior forward Dominique Thomas have been declared academically ineligible by the […]

  • Grunwald case suspect now faces federal child porn charges

    by Shannon Ballard on Jan 18, 17:00

    Devin Peterson’s long list of child pornography-related charges has grown to include two federal charges. If that name sounds familiar, it’s because the 18-year-old is one of the five Valley teens arrested in connection with David Grunwald’s murder. Alaska State Troopers seized Peterson’s phone during that investigation and found a disturbing video that could send […]