The state Senate is generating ideas to make significant cuts to the state budget. They’d like to lock in lower spending levels into the future.
The Republican-led Senate majority is more focused on cutting spending to close the state’s budget deficit than the new mostly Democratic House majority or independent Gov. Bill Walker.
The Senate majority is looking for $750 million in cuts over the next three years. New Senate President Pete Kelly said departments that make up the largest share of spending will see cuts.
“Well, there’s no question about it,” Kelly said. “There are some large cost drivers. We’ve discussed these year after year; health and social services, education, the university. So those will not be beyond scrutiny, and as a matter of fact, we’ll be looking very closely at those.”
The Senate majority is looking to cut five percent of the entire budget this year, then four percent and three percent the next two years.
Kelly, a Fairbanks Republican, said he expects the budget-writing Senate Finance Committee to act fast and decisively.
“It’s like Willie Sutton, the old bank robber, when they asked him, ‘Willie, why do you rob banks?’ He said, ‘That’s where the money is.’ Well, the money is in those three big agencies,” Kelly said.
The Senate majority also is preparing to propose a new state law that would limit how much state government can spend. Kelly said he prefers that voters decide state spending by who they elect, but he said this hasn’t worked during the rise in oil prices in the past decade, before prices fell.
“That seems to have gotten out of hand between about 2006 and 2013 and government got pretty big,” Kelly said. “I think we have to take some extra measures to make sure that once we get spending under control — and we’ve done a pretty good job of doing that to this point, at least a good job of reducing — we want to make sure it doesn’t just pop up again.”
As far as ways to raise more money, Kelly said the Senate is likely to again pass a bill that would draw money from Permanent Fund earnings and reduce dividends. But he said the Senate majority currently doesn’t favor an income tax.
Senate Minority Leader Berta Gardner said all parts of the state budget deserve scrutiny, but the first place she’d look for spending cuts is a reduction in oil and gas tax credits.
Gardner, an Anchorage Democrat, doesn’t want to turn to reducing dividends first.
“If that’s going to happen, first of all, we have to look at oil tax credits,” Gardner said. “And we’ve said this for, I think, four years, (and) say, ‘what is our return on our huge investment.’”
Gardner opposes putting a limit on spending, saying she wouldn’t want to tie the hands of future legislatures when future needs aren’t known.
Kelly has described this session as reflecting a battle between capitalism and socialism. Gardner sees it differently.
“What we really need to do is be listening to each other,” Gardner said. “And it doesn’t have to be a battle. It can be a discussion. I hope everyone’s willing to compromise a little bit to get there.”
The Senate Finance Committee meets Thursday to hear about the state’s forecast for revenues.
Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.
