Alaska Legislature Passes Budget; Avoids possible shutdown
June 12, 2015
“I commend the legislature for coming together to make an agreement on the budget,” said Governor Walker. “The state employs over 15,000 hard working men and women, and provides essential services to each and every Alaskan. Now that a budget has been passed, we can all get back to work and not worry about the harmful impacts of a potential government shutdown.”
Passed Thursday afternoon by both the House and Senate, HB 2001 provides funding to the state operating budget for the coming year. Governor Walker said he was pleased with the compromises that were made in the bill, and that this would allow lawmakers to focus more on the state’s larger fiscal challenges in the year ahead.
“Alaska is facing a $3.5 billion budget deficit, and I’m ready to roll up my sleeves and get to work on that,” said Governor Walker. “We need all hands on deck to fill that gap. Now that the budget negotiations are out of the way, I look forward to working with the legislature to continue this important conversation.”
Also passed Thursday was the Alaska Safe Children’s Act, HB 44, which provides child sexual assault and teen dating violence prevention curriculum to elementary and high schools. A combination of Erin’s Law and Bree’s law, the bill works to arm Alaska’s children with the knowledge to speak up when they are the victims of abuse.
“I am pleased that the legislature set aside their political differences to pass this important piece of legislation,” said Governor Walker. “Thousands of Alaskans are rejoicing this evening for the future safety of our children.”
“We do not support the substantial cuts delivered this session to education and services for Alaska’s sick, elderly, and defenseless. However, we recognize the difficult financial situation Alaska finds itself in today, and we could not continue to watch the House and Senate Majorities place innocent Alaskans at risk over their pursuit of a partisan political agenda,” stated Senator Berta Gardner (D-Anchorage).
Seven weeks past the end of the 2015 session, Senate Democrats voted in support of a Constitutional Budget Reserve draw that safeguards the Permanent Fund Dividend and prevents Alaska from entering an economic free-fall caused by a potential government shutdown.
“The negotiating process was difficult but absolutely necessary to reach consensus on a budget that eliminates the specter of a government shutdown,” said Alaska Independent Democratic Coalition Leader Rep. Chris Tuck (D-Anchorage). “By standing united behind our priorities, our Coalition was able to protect public education and seniors, restore pre-kindergarten funding, and ensure we have a healthy economy.”
The top priority of the Alaska Independent Democratic Coalition was to protect the state’s public education system, and the negotiated budget compromise reflects that priority. The approved budget includes the addition of $16.5 million to the Base Student Allocation, which was previously cut from the proposed budget. The compromise also added back $5 million for the University of Alaska and reinstated funding for pre-kindergarten to increase academic opportunities.
“We tried to achieve budget savings but just could not garner enough support,” said House Finance Committee member Rep. Scott Kawasaki (D-Fairbanks). “We proposed curtailing the spending of $600 million more in oil company tax credits than the law requires. We also tried to achieve $300 million in savings by taking advantage of Medicaid expansion and reform. We protected children and seniors, but ultimately, most of our major cuts were rejected by Republican leadership.”
The negotiated budget compromise also protects vital state services by restoring $2.8 million in cuts from the Senior Benefits Program, which helps low income seniors. The compromise also honors agreed to wage increases for thousands of state workers while still allowing flexibility for the state to renegotiate contracts in times of high or low oil prices.
“I am so proud of the members of our Coalition. We stood together and united around issues important to Alaskans,” said Rep. Tuck. “We faced enormous pressure to sacrifice our priorities this session. We did not buckle under that pressure. We expect a more productive working relationship with the Majority in the interim and next session.”
“The Senate stepped up to the plate this year to tackle the task of reigning in government spending, while preserving vital public services,” said Alaska Senate President Kevin Meyer (R-Anchorage). “I couldn’t be more proud of the members I had the opportunity to work with this year. We didn’t accomplish everything that needs to be done, but we found substantial savings and began the conversation of how to address Alaska’s fiscal crisis.”
According to the Alaska Senate Majority, a combination of low oil prices and government spending meant Alaska was facing a $4 billion budget shortfall this year. In response, the Legislature passed historically low budgets, reducing spending by $800 million or $1,086 for every Alaskan.
“Government has had a good run, but circumstances have changed,” said Senator Pete Kelly (R-Fairbanks). “Alaska’s budget shortfall is a challenge, but it also represents an opportunity to reduce a government that has grown well beyond its means. It took a long time to come to this conclusion because this fight over the budget was a fight worth having. Government must shrink, and that is not easy, but it must be done.”
In a good faith effort to avoid a government shutdown, the Senate agreed to fund a one-time cost of living wage increase for public employees. An understanding was reached between all interested parties that there would be no public employee raises for the next three fiscal years. If oil prices rise above $95 bbl or below $45 bbl for 60 consecutive days, however, contract negotiations may be reopened.
“The fiscal future of our state is being discussed in homes and businesses,” said Senate President Meyer. “Alaska’s fiscal reality will require us to reduce government spending. We took a great first step here, but more will be required of Alaska leaders and Alaskans to fully address our budget challenge.”
Americans for Prosperity Alaska in a prepared statement said, "After long discussions, it is exciting to see the state legislators stand with Alaska taxpayers. Our state chapter has been pushing for a responsible budget that cuts spending from the previous year, while also stopping funds from going to Medicaid expansion. Alaska needs to right-size its government before considering any new revenue sources, and it is great to see the legislature in agreement. While it's troubling a vocal minority will stop at nothing to ensure state workers receive raises during billion dollar budget shortfalls, it is comforting to know Gov. Walker cannot expand Medicaid under Obamacare with this agreement.”
The House and Senate Conference Committee on House Bill 2001 met Wednesday and approved and passed out a compromise budget for fiscal year 2016 using funds from the Constitutional Budget Reserve.
The Alaska House of Representatives adjourned Thursday afternoon sine die the second special session of the 29th Legislature. The House adjourned following concurrence in Senate changes to House Bill 44, the Alaska Safe Children’s Act, and after accepting the conference committee report on the FY16 statewide operating budget, HB 2001.
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