SitNews - Stories in the News - Ketchikan, Alaska

Senate Passes House Bill 72 reducing unrestricted general fund spending by more than $470 million


April 03, 2015
Friday PM

(SitNews) - The Alaska State Senate has passed House Bill 72, the Operating Budget for FY 2016. The budget includes hundreds of cuts which will save the State at least $470 million in unrestricted general funds. Targeted reductions were taken in all branches of government and all departments. The reductions are a result of the $3.5 billion deficit that the State of Alaska is facing after oil prices plunged from an average of $110 a barrel to around $50 per barrel within a six-month period.

With fewer than 24 hours of consideration, the Alaska State Senate slashed nearly $50 million of Base Student Allocation funding. While beginning debate on the operating budget Friday morning, Senator Berta Gardner (D-Anchorage) offered an amendment to restore the $47.5 million schools funding cut found in the Senate Finance budget. The amendment failed 15-5 with only Senator Gardner, Senator Dennis Egan (D-Juneau), Senator Ellis (D-Anchorage), Senator Donny Olson (D-Anchorage), and Senator Bill Wielechowski (D-Anchorage) voting to support basic classroom services for Alaska students and avoid large increases in class sizes across Alaska.

“The budget reflects our priorities in dollars. My number 1 priority is providing opportunity for our children. Education is opportunity. It drives our economy and incubates innovation. More importantly, properly funding education is the right thing to do, I am disappointed my colleagues failed to support the amendment,” said Senator Gardner.

Recognizing the substantial deficit Alaska currently faces, Senator Wielechowski offered a second amendment to restore education funds slashed in Senate Finance, but offsetting the cost with a short delay in oil tax credit payments. Alaska will pay $700 million in oil tax credits this year, while only taking in $300 million in production tax payments. His amendment would have delays tax credit payments until a future date.

“It is a sad day. Oil tax credits for outside corporations come before Alaska school children,” stated Senator Wielechowski.

Amendment #2 also failed to be adopted on a 15-5 vote, with Senators Gardner, Egan, Ellis, Olson, and Wielechowski voting in favor of the delaying oil tax credit payments in order to stave off drastic and adverse cuts to public school classrooms.

“The catastrophic fall in oil prices over such a short period of time has forced us from what we used to refer to as a’ glide-path to a smooth landing’ to a ‘crash-path to a survivable landing’. We are trying to soften that crash by spreading targeted cuts across the board,” said Senate Finance Co-Chair Pete Kelly, R-Fairbanks. “The cuts we had to make were very distressing for members of the Senate. But, we took the steps we needed to take to protect future generations. If we spend all of our reserves now, there won’t be anything left.”

As part of the budget process, the Senate Finance Committee looked at each department and agency and focused on the largest cost-drivers in the state budget - education, health and social services and transportation.

“The reality is we have to make these cuts and reductions, but we can’t in good conscience make cuts everywhere else and not look at ourselves – the Legislature will be taking a reduction alongside every state agency,” said Senator Kelly. “We are all in this fiscal situation together and we feel strongly that the burden is all of ours to bear.”

“Everyone put a lot of work into making sure no stone was left unturned as we looked for responsible reductions. These are not easy decisions – these are decisions that will have an impact on the lives of Alaskans. We cannot turn our back to the fiscal reality we are in – due to the price of oil, we are facing a $3.5 billion deficit,” said Senate President Kevin Meyer, R-Anchorage. “Alaskans need to understand that this is not the end of the budget process or our discussion about our fiscal reality. The passage of HB 72 is the conversation starter – we are asking every Alaskan to participate and help direct our fiscal future.”

The budget overall, including federal funding and designated spending, totals $9.3 billion. To look at a detailed breakdown of the budget, click here.

HB72 now heads back to the House for concurrence. If the concurrence vote fails, a conference committee will be appointed to continue work on the FY 2016 budget.



Edited by Mary Kauffman, SitNews


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