Hundreds of millions more in budget cuts recommended

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The Legislature completed the first stage of its annual budget process today. House Finance Subcommittees recommended more than $120 million more in cuts on top of the 100 million that Governor Bill Walker proposed.

Health and Social Services was the department that received the deepest cuts. They include eliminating $5.18 million in cash assistance to seniors, and three million in behavioral health grants.

Representative David Guttenberg, a Fairbanks Democrat, opposes the cuts. He says reducing treatment of people with addictions will cost the state more in the long run.

“These grants will clearly prevent increases in costs in other places, in the courts, in the Department of Law, in our prisons, in our various higher end costs,” said Guttenburg. “Dealing with folks that have issues and troubles at the most efficient place to touch them, is something that we need to do.”

Overall recommended cuts to Health and Social Services total forty-one million dollars, roughly one-third of all cuts that finance subcommittees recommend.

Representative Dan Saddler, an Eagle River Republican, compared the difficulties faced by those with addictions to the choices the Legislature faces.

“There are many unfortunate and difficult challenges we face in life and running away from them in a bottle or a needle is not the way to solve them,” Saddler said. “The way to get through problems is to face the difficult choices and to make difficult choices.  And I think that is what we’re doing in this budget, and that’s what we’re doing in this particular allocation.  In addition to a heroin crisis in Alaska, we have a fiscal crisis in Alaska. And I think we are making the difficult, but responsible decisions to scale our resources to meet our needs the best way we can.”

Health and Social Services Commissioner Valerie Davidson says she’ll be working to inform legislators about the exact effects of the proposed cuts before the entire Legislature finishes its work on the budget this spring.

“We’ll definitely continue to work with members of the Legislature,” said Davidson. “We realize that cuts have to be made. And our job is to make sure that everybody understands the implications of the cuts that are being made.”

Economist Gunnar Knapp says that budget cuts will have broader impacts on Alaska’s economy, along with the direct effect on services.

Knapp told the budget committee on Thursday that for every one-hundred million dollars in broad-based cuts to state government, the state will lose 1,260 jobs and $115 million in income.

In comparison,  introducing a similar amount in income taxes would impact fewer jobs, but could mean 20% more lost income.

Knapp urged legislators to close the state’s$3.5 billion budget shortfall.

The smoothest transition is to make a significant start on reducing the deficit this year. Not making major progress this year would have a big impact. The rating companies have promised that they would further downgrade our credit ratings and then there would be impacts due to a loss of business confidence and reduced private investment.

The Legislature will hear public testimony on the budget Feb. 29 to March 3 at locations across the state.