State budget advances, but how to pay for it remains unclear

Rep. David Guttenberg, D-Fairbanks, comments on a state operating budget amendment in the House Finance Committee in the Alaska State Capitol on March 6. Guttenberg opposed amendments proposed by minority-caucus Republicans before the committee passed the budget on Friday. (Photo by Skip Gray/360 North)

The Alaska House Finance Committee finished its work on the budget on Friday. Its budget includes $5.3 billion for the part of the budget that the Legislature directly controls each year. That’s $337 million more than this year, and $37 million more than what Gov. Bill Walker proposed.

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Fairbanks Democratic Rep. David Guttenberg opposed cuts proposed by minority-caucus Republicans.

“If we had taken some of those cuts, we would have done exactly what this state doesn’t want to do,” Guttenberg said. “And that is: hinder economic development through the Department of Natural Resources with permitting and public information on our resources.”

The Senate budget still has to take shape. The Senate did pass the bill known as the fast-track supplemental last week. That includes $45 million of the Medicaid increase.

But more than 60 days into the 90-day session, how the Legislature will choose to pay for the budget remains unclear.

Sen. Anna MacKinnon, R-Eagle River, speaks during a Senate Majority Press Availability on April 3, 2017. (Photo by Skip Gray/360 North)

The Senate majority would draw a higher percentage of the permanent fund’s market value at slightly less than 5.25 percent. Of that draw, three quarters would go to government and a quarter to permanent fund dividends. The House majority budget includes a draw of a little less than 4.75 percent. Their draw would be split two-thirds to government, one-third to PFDs.

Eagle River Republican Sen. Anna MacKinnon said there’s a concern that election-year politics could affect the talks over a plan.

“Each body will craft their own message to try to convince the public that they’re doing the right thing,” MacKinnon said. “And, inside of each body, there’s a majority position and there’s a minority position. And so it does make it difficult, when you’re trying to score political points, to do what’s right for Alaska.”

For her part, MacKinnon said she’d solve the problem by focusing on a permanent fund earnings draw backed by rules to control spending.

The House and Senate finance committee co-chairs have reached an agreement to talk about a long-term plan.