Legislature headed into budget negotiations

Stopping in Wrangell last week, District 36 Rep. Dan Ortiz (I-Ketchikan) was able to share with the Sentinel some his perspectives on how the state's current budget negotiations are headed.

House Bill 256 and Senate Bill 139 are each chamber's proposal for a state budget, which currently is set to exhaust the Statutory Budget Reserve and draw from the Congressional Budget Reserve, which at current spending

levels may run out by 2019. The CBR fund is where all oil tax settlement revenues are deposited, and withdrawals from the fund require a

three-quarter vote of the legislature.

Gov. Bill Walker already released his budget in December, which proposed approximately $100 million in cuts, on top of $500 million in cuts the previous fiscal year. Wrangell residents were among those in the state providing testimony to the latest draft of HB 256 last Thursday, and SB 139 on Tuesday.

"The cuts need to be made because we have this $3.5 billion deficit," Ortiz agreed. "But that said, the question's going to be how much more from the governor's budget are we going to go?"

Despite the cuts outlined in Walker's budget, funding for the Alaska Marine Highway System will largely

remain intact. While concerned about the future of the

region's ferry system, Ortiz found the suggested cuts reflected the feedback gathered by AMHS during public hearings last fall.

Caucusing with the House minority, the first-term legislator expressed hope some of the heftier cuts proposed to

certain services would be lightened during CBR negotiations. As the House needs a

three-quarters majority to access those funds, Ortiz explained the process

gives the minority some

leverage in affecting the final

budget, as happened last

year.

"We were able to get some money back for public radio, we were able to get

some money back for the ferry system, and we were able

to get some money back for seniors," he recounted. "Those still remain my priorities. Before I give my CBR vote I'm going to have to see some money added back to those particular areas."

Perhaps more than cuts, another contentious element to passing a budget will be new revenue sources.

One of those being

considered by both chambers and by Walker's office will be using a portion of Permanent Fund earnings to finance operations.

"There's three different models that we're looking at," said Ortiz. "All of them use different variations, but the same source is Permanent Fund earnings. They're all guaranteeing there will be some dividend there."

Gauging the general

mood in Juneau, Ortiz said

tapping the Permanent Fund would likely be the least contentious.

"There's a consensus there that we're going to be doing something with the Permanent Fund earnings," he said.

Other sources – income tax, increased fish production

taxes, higher alcohol tax and other variations on existing taxes – will be more strongly debated.

"Every group has a good argument as to why we

shouldn't use that particular tax," he acknowledged. "To be honest, I don't know that

we'll have a majority of votes to pass any of those new

revenues, other than the permanent fund earnings. But that would leave us with a deficit that could only be closed with using savings at a greater rate than the governor wants to use those savings. So I don't know if he's going to let us do that."

So negotiations await. And even when an agreement is reached in the Legislature, Ortiz pointed out the budget they put out will still need to be approved by Walker.

"It's still iffy as to where it's all going to be," he said. "And there's no doubt that, in the end, we're going to be cutting the budget at least by what the governor is saying, but I think it's going to be more than that. And I'll vote for more than that, because hey, we've got to close that gap."

The House Finance Committee is planning to finalize its version of the budget this week, before sending it to the House floor for a vote.