JUNEAU — Legislators are applying some creativity to the House version of the state operating budget as they grapple with a multibillion-dollar state deficit exacerbated by low oil prices.
The latest draft of the budget in the House Finance Committee envisions this year putting $80 million into the fund used to pay for state-sponsored scholarships and drawing nearly as much out next fiscal year to go toward the teachers’ retirement system.
It also would replace a portion of state unrestricted general funds for the university system with $24.7 million from the Power Cost Equalization endowment. That provides assistance for rural areas faced with high electricity costs. House Finance co-chair Mark Neuman said there are excess funds beyond what is needed for the program and that’s what the committee has proposed using. The goal is to reduce unrestricted general fund spending and the state’s draw on reserves, the Big Lake Republican said.
The state budget deficit is in unrestricted general funds.
The bill draft also would capture $435 million in still-available reserve funds this year and put it into the fund that pays for public education. Neuman is proposing using $145 million of that in each of the next three years toward the state’s much larger overall tab for education.
The committee plans to finalize a version of the budget next week that it will send to the House floor. The Senate isn’t far behind in its work. Differences between the two budgets will be worked out by House and Senate negotiators.
Meanwhile, work continues on several other pieces that if passed would affect the budget, including proposed changes to Medicaid, the criminal justice system and oil and gas tax credits. Legislators also have been hearing different approaches to using Alaska Permanent Fund earnings to help pay for state government and tax proposals from Gov. Bill Walker.
The budget draft in the House funds the oil and gas tax credits at a minimal level. Neuman said that’s a placeholder for now. The House Resources Committee has been holding hearings on Walker’s proposal to raise the minimum tax, change how some credits are used and eliminate certain credits.
