USES $600 MILLION FROM THE CONSTITUTIONAL BUDGET RESERVE
After just four days of deliberation, the Alaska Senate has passed an operating budget for 2019, the fiscal year that starts in July.
The Senate’s budget totals $3.2 billion in unrestricted general funds for agency and statewide operations, but add another $1.28 billion passed in an education funding bill earlier this month, for a total of $4.48 billion. This doesn’t include federal funds and other general funds.
The operating budget also appropriates over $1 billion to pay eligible Alaskans a $1,600 Permanent Fund dividend.
“This budget provides for the services Alaskans rely on in their everyday lives,” said Sen. Lyman Hoffman (D-Bethel) co-chair of the Senate Finance Committee. “We need to come together this year to provide fiscal stability and protect the Permanent Fund.”
The House and Senate budgets largely diverged on spending for Medicaid and debt payments for oil and gas tax credits.
The Senate’s budget reduced Medicaid spending by $60 million and directed the administration to manage the program costs better.
It also includes an additional $135 million to meet the state’s legal obligation to pay down outstanding debt related to oil and gas tax credits.
“The Senate prioritized the state’s constitutional obligations in this budget,” said Sen. Anna MacKinnon (R-Eagle River) co-chair of the Senate Finance Committee. “In order to reduce the size of government, we must actively pursue legislative reforms.”
The budget draws $600 million from the Constitutional Budget Reserve; the CBR vote passed with all Democrats voting against it except Hoffman.
“This budget represents another step toward fiscal certainty for Alaska,” said Senate President Pete Kelly (R-Fairbanks). “It’s a tremendous amount of work to put a state’s budget together and I congratulate and thank every one of my colleagues in the Senate for the work they have done.”
HB 286 passed the Senate by a vote of 13 to 7 and is now on its way to the Alaska House of Representatives for concurrence.
The House had passed a larger budget: $3.9 billion with just unrestricted general fund money, plus an unknown amount of education spending, since the education bill sent to the Senate had no funds attached to it. But with the education funds decided on by the Senate, the House’s budget would be $5.18 billion.
A conference committee will be hammering out the differences between the two budgets.
GOVERNOR HAD ASKED FOR $4.7 BILLION
Gov. Bill Walker had asked for a $4.7 billion budget, including $27 million more for Medicaid expansion since enrollment in Medicaid is up 35 percent since he took office.
- In FY 2015, Medicaid covered 163,388 people.
- By FY 2017, 218,385 enrolled
- In FY 2019, the governor is expecting more than 225,000 to be enrolled, which is over one third of Alaska’s population.
The additional 6,615 people that will enroll in Medicaid will be covered by the $27 million increase, amounting to over $4,000 per new enrollee. However, it’s also likely the governor will come back for a supplemental budget request of $100 million to cover more Medicaid expenses.
The entire Democratic minority caucus, with the exception of Sen. Lyman Hoffman, voted against drawing $600 million from the Constitutional Budget Reserve.
Sen. Bill Wielechowski, who casts himself as the protector of the Permanent Fund Dividend, voted against it because he wanted to spend more money. If he would have gotten his way, the draw upon the Permanent Fund Earnings Reserve Account would have been at least $600 million more.
Sens. Shelley Hughes and Mike Shower voted in favor of the Constitutional Budget Reserve draw, just as former Sen. Mike Dunleavy had done last year — objecting to the spending but in the end voting to allow the funding formula. The two differ from the majority caucus over the size of the budget and the size of the Permanent Fund dividend.
The Senate budget calls for a 5.25 percent draw on the Earnings Reserve Account, the same as proposed by the House, and a $1,600 Permanent Fund dividend.