The Alaska Senate is considering a bill intended to limit how much the state government spends.
When oil prices soared in 2008, so did Alaska’s state spending. Soldotna Republican Sen. Peter Micciche said that if the state had the limit he supports back then, it would have spent less — and it would have another $15 billion in savings.
“It’s not too late to make the changes in the future that we need to make, to ensure we don’t put ourselves in the same position that we’re in today,” Micciche said.
Alaska does have a limit on spending in its state constitution. But the amount allowed under the constitutional limit has grown so much that the state is nowhere near it.
Under Senate Bill 196, spending on state government departments couldn’t be more than $4.1 billion in the fiscal year starting next year. That’s a little more than the amount that Gov. Bill Walker proposed for the year starting this July.
The limit would make a few exceptions. State payments to increase the Alaska Permanent Fund, permanent fund dividends and capital spending wouldn’t count toward the limit. And payments that the state is obligated to make to pay off debts also would be excluded.
The limit would grow based on inflation.
Anchorage Republican Sen. Natasha von Imhof said the spending cap would provide stability.
“We can set something in place that people can predict for several years in the future and budget for,” von Imhof said. “And I think that just provides confidence. It provides predictability. And that is what we need for a future economic growth and investment.”
Former Division of Water Director Michelle Hale opposed the bill.
Hale said applying the limit could force cuts to state services.
“Spending caps and arbitrary cuts are blunt tools. They’re blind,” Hale said. “If we say we have to cut by another $100 million this year and turn that over to the agencies to do, basically the Legislature is abrogating its responsibility to the state and the people of the state of Alaska.”
The Senate Finance Committee discussed the bill Thursday and plans to consider it again Friday.
Andrew Kitchenman is the state government and politics reporter for Alaska Public Media and KTOO in Juneau. Reach him at akitchenman@alaskapublic.org.
