Legislative committee holds first listening to to go over new price range proposal | Native Information
State lawmakers looked at Governor Mike Dunleavy’s budget proposal on Friday. Much of the discussion centered on how much of the Alaska Permanent Fund’s revenue to spend.
They also received a report detailing some of the estimated $ 350 million cuts proposed for fiscal year beginning July 1.
The House Finance Committee’s “pre-meeting hearing” was held to “examine Alaska’s financial realities,” according to an announcement from the meeting. The moderators were Legislative Finance Director Alexei Painter and Larry Persily, former Deputy Commissioner of the Alaska Department of the Treasury.
The governor’s new spending proposal sees dividend payments of $ 4,958 to Alaskans in 2021 from the Alaska Permanent Fund, no change to the K-12 education funding formula, a $ 13.5 million increase in public safety, and the first nationwide bond proposal in nearly 10 Years ago. Dunleavy is proposing to call for a referendum to pass new taxes, as well as a cap on government spending.
Painter said a planned $ 35 million cut in Medicaid is not expected to have any impact on services as the budget for coronavirus support increases for the current fiscal year.
He said the governor’s budget would cut 100 jobs, or 25% of the workforce, at the public aid organization. The governor wants to automate the work and make “workflow changes” to save $ 3.4 million.
“That’s by far the largest reduction in positions,” said Painter.
Some of the positions are partially financed by the federal government.
Corey Allen Young, Dunleavy deputy press secretary, said there will be no loss of service.
The savings result from “process / system improvements and planned downsizing after a ramp-up to remedy the backlog,” he wrote in an email response to questions.
“The DPA plans to remove these items through wear and tear, and since the revenue from Authorization Engineers is quite high, the division expects this will not be a problem. In the future, DHSS DPA will see a combination of efficiency and technical improvements, ”wrote Young.
Reductions are also proposed in the Child Support Enforcement Department. Young said the state had invested in an information technology system for child support.
“This will reduce annual programming and server overheads without changing service levels,” wrote Young. “The child benefit department is also proposing to cut three long-term vacancies that have not yet been filled.”
According to Painter, the reimbursement of school bonds to municipalities is to be halved. It is proposed to close some offices of the Alaska Division of Motor Vehicles. The Alaska Marine Highway System and the University of Alaska are also subject to cuts in Dunleavy’s proposed spending plan.
It is recommended that you pay oil and gas tax credits in full. The $ 60 million will come from the Alaska Industrial Development and Export Authority.
Persistently led the discussion about spending money on the Alaska Permanent Fund. It has grown to about $ 70 billion and is set to reach $ 80 billion by 2030, but only if heads of state keep the draw at 5% or less, he said. The fund is expected to earn 6.75% over the long term.
“The more money the fund has, the more money you can withdraw each year,” said Persily. “Anything you take out now will reduce your annual draw.”
Dunleavy plans to pay an additional dividend of $ 1,900 and a full legal dividend of $ 3,058 this year to help tens of thousands of people unemployed due to the coronavirus pandemic.
Persily said, “What if the decision is made that there may be good reason to overstay revenues right now, but then the land and investments have had a really bad year?”
He corrected some figures given by the governor. Dunleavy has indicated that the permanent fund has grown by about $ 10 billion since March.
It’s true, Persily said, but what the governor doesn’t mention is that the fund lost $ 7 billion in the previous months.
Legislators asked Persily about possible future budget deficits and potential new income such as a state sales tax or an income tax.
Persily estimates that a 1% sales tax would bring in $ 100 million to $ 200 million, depending on how it was set up and whether there were exceptions or a cap.
He recommended keeping a possible nominal income tax and adding more new income.
The Alaska House Majority criticized Dunleavy’s budget plan for creating a deficit of $ 2.1 billion for the coming year, according to a press release.
“The governor’s budget would pull $ 3 billion from the Fund’s permanent reserve to pay the largest dividends in history. This would significantly reduce the investment potential of the fund and reduce the risk of future dividend distributions. The amount available for dividends and essential services each year would decrease by $ 200 million by 2030, ”the press release said.
Rep Neal Foster, D-Nome, co-chair of the House Finance Committee, described Friday’s hearing as a sobering reminder of Alaska’s budget troubles.
Contact Amanda Bohman at 459-7545. Follow her on Twitter: @FDNMborough.