From: Rep.Les.Gara@akleg.gov Subject: Alert: Tomorrow, Budget PUBLIC TESTIMONY, 11 a.m. – 2 p.m. Date: Fri, 22 May 2015 01:32:54 +0000
Dear Alaska Neighbors:
Without commenting on the weirdness of this all, I have been notified that public testimony will be allowed on the latest version of the Operating Budget, which was just released about an hour ago.
The bottom line is that this operating budget (when added to what the Governor did not veto a few days ago) is the exact same budget as the one that passed the legislature in April, before special session.
You can testify: From your local Legislative Information Office, or if you do not have a local office, by phone if you call in to 844-586-9085. Testimony is scheduled from 11 am to 2 p.m., and it is my belief that if more people call in than can fit in these hours, the Finance Chairmen will extend testimony – but that is just what I anticipate.
Main Budget Issues
Rumored Proposal that Some GOP Legislators Might Want To Spend $5 billion in Permanent Fund Earnings Reserve Money To Avoid Bipartisan Budget
While I would have liked more time to give you notice, I just received it myself at 3:45 p.m.
Here are some major issues that you might be interested in, and you may have your own. The budget that passed the House passed with only GOP-led caucus votes, and we are hoping to build a bi-partisan budget. Your testimony is important. The current budget is $3.2 million more than Alaska has in state general funds to pay.
I Oppose Draining $5 billion from the Permanent Fund Earnings Reserve to Fund This Budget.
This budget spends $3.2 billion more than we have in state general fund revenue. It is one that is largely written by Republican leaders, and does not include important spending cuts and budget items (adequate school funding for example). There has been a strong rumor that a few GOP leaders, to avoid seeking a bipartisan budget, would rather drain $5 billion from the state’s Permanent Fund Earnings Reserve and deposit that money into the Permanent Fund, than work on a bipartisan budget which would get the votes from Democratic and Independent legislators to fund the budget with savings in our Constitutional Budget Reserve account.
According to the Department of Revenue, this move, if the rumor is true, could jeopardize future dividends in a year, and dividends after that. That is because the Earnings Reserve is what is used to pay dividends and inflation-proof the Permanent Fund. If Permanent Fund earnings are poor for a few years, perhaps because we face a stock market downturn, then according to a Department representative on May 19, “There is a real chance that if the balance of the [Earnings Reserve] is reduced below the amount needed for dividends that dividends will be reduced in that year.”
Some Budget Savings/Cuts That You Might Be Interested In
Oil Company Tax Credits: $700 million is in the budget to pay oil companies for tax credits. Companies know these tax breaks are subject to legislative appropriation and in tight fiscal times we may not have the money to pay them immediately. A good case can be made to ask oil companies, and not just children and seniors, to chip in to help with our budget crisis. Some have proposed capping credit payments, until Alaska gets its fiscal house in order, at perhaps $500 million a year. The first $500 million worth of credit payments would be paid in the order they are submitted, and, perhaps 10 months into the fiscal year, remaining credit applications would have to be honored a few months later when the next fiscal year starts.
Susitna Dam: There is roughly $6 million in money appropriated in prior years that is not obligated for this coming fiscal year, and that can be transferred back into the state’s General Fund.
Controversial Anchorage Bragaw Road Extension: $17.3 million of this previous appropriation has not been spent and construction on this controversial road has not been started. That can be transferred back into the state’s General Fund.
Move From New Anchorage Legislative Office Building: The Legislature paid $685,000 for office space and related expenses until some in the Legislature decided to rent a rebuilt building. The new one costs roughly $4.2 million/year. We have been offered space on 7th Avenue in the Atwood Building, where the Governor works, for roughly $550,000/year. There would be a one-time cost to arrange office space there (roughly $3.4 million). But in the long term this would save Alaskans money.
Medicaid Expansion and Reform Savings: Through the budget we can expand Medicaid, accept $145 million in federal funds, and save $6.1 million in state spending because under Medicaid Expansion the federal government pays for some medical costs the state now foots the bill for. The savings jump to roughly $40 million over the first 6 years.
Separately, with a stand-alone bill outside of the budget, like the bill proposed by the Governor, then the state in total would, under a recent study commissioned by the Department of Health and Social Services, save $330 million in state spending over the first six years.
That would total well over $200 million a year in savings until the state has its fiscal house in order.
Some Other Important Budget Items: Schools, Children, Seniors
Education: For a child, academic opportunity matters. The current budget cuts $32 million in funds promised under legislation passed last year, and an additional $16 million cut beyond that added by the GOP-led majority. To keep last year’s promised funding for this coming school year (a three year school funding plan was passed last year), that $48 million would have to be restored. Under the current budget, through attrition, retirement or layoffs, schools in many districts will lose teachers, support staff, and possibly the ability to provide curriculum.
Child Protection: Currently 40% of Alaska’s foster youth end up homeless at some point in their lives, or end up couch surfing because they don’t have a place to live. Twenty-seven percent end up incarcerated. And the Director or our Office of Children’s Services has testified that “kids will in fact die as a result of unmet needs and our inability to get to them quickly enough” under this budget because this division is chronically overstressed and understaffed. The state has not implemented a 2012 study showing how badly understaffed the Office of Children’s Services is, and in the past five years things have only gotten worse as the number of foster youth has risen from roughly 1,700 to 2,500.
A partial fix would not add to last year’s budget. The Department has recently qualified to use $2.9 million in federal TANF funds to fund our child Advocacy Centers, for victims of child abuse. That frees up the $2.9 million in state funds we used to appropriate for these centers. Those TANF surplus funds were not being used in the past, and this has freed up funds we can transfer to the Office of Children’s Services to hire needed child abuse investigators, caseworkers for youth and foster families and foster parent licensing staff.
University: The University of Alaska is Alaska’s largest provider of vocational education, and, of course, it is our public university. It has great promise to educate Alaskans, train them for jobs, and help diversify our economy. The current cut is roughly $30 million from last year and will eliminate many programs.
State Funded Pre-K: The budget completely eliminates the state’s $2 million classroom pre-k program, and state funded non-classroom “Parents as Teachers” pre-k. It cuts the Best Beginnings pre-k book program from roughly $900,000 to roughly $350,000.
Senior Benefits for Low Income Seniors: The budget proposes to cut the Senior Benefits payment that took the place of Alaska’s old Longevity Bonus program. For single seniors who struggle to pay for medicine and basic living expenses, who, as have income between $11,040 and the top limit of $25,000, monthly benefits will be cut by 20%.
Alaska Marine Highway Cuts
Many of you rely on the Marine Highway for business and transportation in our coastal communities. Cuts to that system have been described by coastal residents as very damaging, and have concerned many Alaskans who have contacted our office.
These are some of the items in the budget that might be of concern to you. There are very likely others. But I wanted to get an e-mail out to you as quickly as possible.
Thank you. I hope we can all work towards a bi-partisan budget with a mix of these budget reductions and items.