The House on Thursday approved an operating budget for the upcoming fiscal year that reduces it from current spending by $200 million.

It didn’t go nearly as far as Gov. Mike Dunleavy’s Feb. 13 proposal, which sought reductions to close a $1.6 billion gap with measures such as shutting down the Alaska Marine Highway System Oct. 1.

The $10.29 billion budget features all funding sources including federal dollars and receipts such as hunting and fishing licenses, car rental fees or university tuition.

It, however, does not include a Permanent Fund dividend appropriation. The House decided it would make that a separate appropriation put forth in a bill by Dunleavy.

The vote fell along caucus lines with the bipartisan, Democratic-led majority prevailing in the 24-14 tally. Rep. John Lincoln, D-Kotzebue, and Rep. Mark Neuman, R-Big Lake, had excused absences.

On Monday, the House Finance Committee forwarded a budget that started with the current year’s spending rather than Dunleavy’s proposal. This did not sit well with House Minority Leader Lance Pruitt, R-Anchorage.

“In general what we did not do is we did not have the restructuring in government that the public is asking us for,” Pruitt said. “This is not about this year’s budget. If you think it’s what we’re going to deliver for the next fiscal year, then you’re absolutely looking at this budget wrong.”

Most of the minority took a turn speaking out against the budget. Freshman lawmaker and House Finance Committee member Ben Carpenter, R-Nikiski, was among the more pointed.

“We are behaving in a fiscally irresponsible manner,” Carpenter said. “We are sending the wrong message to the next generation, to our businesses who are relying upon us to have a fiscally sound policy going into the future.”

Some House Finance Committee members periodically challenged Dunleavy’s budget team for not being able to discuss the impacts of some proposed cuts or justify the cuts to their satisfaction.
This led the committee to rebuff Dunleavy on some of the major provisions such as shutting down the WWAMI School of Medical Education program or repealing local taxing authority.

“Is the budget perfect? Not even close,” said House Finance co-chair Tammie Wilson, R-North Pole. “But here's the problem: I can’t justify decreases unless I know how it’s going to affect my constituents, but the business at large. That is the piece that was missing.”

In a news release, the House majority touted what it believed to be significant cuts, including:

  • $73 million cut from the Department of Health and Social Services, mostly from Medicaid.
  • $49 million cut from the School Bond Debt Reimbursement Program. This means local governments will need to contribute an additional $49 million unless the Senate restores the balance.
  • $14.5 million cut from the Department of Transportation, with $10 million of that coming out of the ferry system. The Senate has been working with DOT to keep the ferries running after Oct. 1
  • $13 million was cut from the Department of Corrections, with hopes of limiting Dunleavy’s plan to send prisoners to out-of-state facilities.
  • A $10 million reduction from the University of Alaska, rebuffing Dunleavy’s efforts to cut $134 million.

“With regard to concern that the cuts weren’t deep enough, we cut $200 million from last year’s budget; that’s very substantial,” said House Finance co-chair Neal Foster, D-Nome. “We did not cut $1.6 billion because people of Alaska told us that deep cuts to education, healthcare, marine highway system, and so much more, those were just a little too much for folks to accept in one year. Our goal has been to reduce the trajectory of our spending in a more thoughtful and gradual manner rather than send us over a cliff in one year.”

The bill will be transmitted to the Senate for further review. Once the House and Senate agree on a budget, it goes to the governor who will have 30 days to sign it.

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