Alaska Senate Passes State Spending Limit; Senate Democrats Criticize As Phony Budget Cap
By MARY KAUFFMAN
March 24, 2018
“Alaska must control its spending in order to refill our savings accounts and sustain constitutionally required programs Alaskans rely on in their everyday lives,” said Senate Majority Leader Peter Micciche (R-Soldotna). “Senate Bill 196 will help constrain the growth of government, so in the future we don’t find ourselves in the same difficult fiscal situation we face today.”
The spending limit is a key priority for the Senate Majority. The Senate passed a spending limit in 2017 paired with a bill that placed guard rails around draws from the Permanent Fund earnings reserve, but the spending limit provision was rejected by the Alaska House Majority Coalition. This year, the Alaska Senate passed the spending limit as a standalone bill to simplify negotiations with the House on a solution to the state’s budget deficit.
“Had we had an effective spending cap in place during the fiscal years of 2006 through 2014, we would have about $15 billion in our Constitutional Budget Reserve right now,” said Sen. Natasha von Imhof (R-Anchorage). “A spending cap could give the Legislature the discipline it needs to keep state spending at a reasonable level from one year to the next.”
To promote transparency with the public, the bill requires the governor to submit a report, along with the budget, comparing the governor’s spending proposal with the spending limit. In addition, the spending limit adjusts over time to reflect changes in inflation.
“SB 196 plants a seed for a future tree of fiscal sustainability for Alaskans,” said Sen. Micciche. “Had the Legislature passed this bill 15 years ago, we would have billions more in savings, new taxes would not be a primary objective for the current House Majority, and it’s unlikely the governor would have cut Permanent Fund dividends.”
The limit does not apply to appropriations to the Alaska Permanent Fund, payments for Permanent Fund dividends, required spending for state debt obligations, capital projects, or to meet a state of disaster declared by the governor as prescribed by law. The bill also has a three year “look back” provision to evaluate how the limit is working.
Senator Berta Gardner (D-Anchorage), Senator Bill Wielechowski (D-Anchorage) and Senator Tom Begich (D-Anchorage) offered numerous amendments Friday to fix what they say is the unenforceable statutory appropriation limit in SB 196. The Senate Democrats say the Senate Majority members opposed every amendment. The amendments were offered by the Senate Democrats in their efforts to tighten up the "massive loopholes contained in the so-called appropriation limit", to protect public safety, education, and senior programs.
The Alaska Senate Democrates said in a news release the amendments were voted down, leaving future funding levels of these critical state services in jeopardy. Another four amendments were offered that would use budget surpluses to repay Alaskans for the cuts to their 2016 and 2017 Permanent Fund Dividends and shield PFDs from potential elimination. The Senate President Pete Kelly (R-Fairbanks) claimed these four amendments were "not germane" and ruled them out of order.
"Alaskans want to see us restrain spending. But let's be straight with Alaskans: this bill does not do that," said Sen. Wielechowski. "Not only is it legally unenforceable, it is laden with massive loopholes that make the so-called appropriation limit meaningless. It also seriously endangers future PFDs and fails to protect the Permanent Fund Earnings Reserve."
Again, SB 196 passed the Senate Friday by a vote of 13 to zero after Senate Democrats opposed the bill during the floor debate and chose to not participate in the vote.
The bill is now on its way to the Alaska House of Representatives for consideration.
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