By Blake Essig
Channel 2 News
6:30 PM AKST, December 14, 2012
Governor Sean Parnell rolled out his 2014 budget plan for the next fiscal year and the proposal focuses on resource and energy development, transportation and infrastructure, public safety, military support and education.
In the coming fiscal year, Gov. Parnell says he plans to cut state spending by nearly $1.1 billion and also held the state operating budget to less than one percent growth.
Gov. Parnell said “my main priority was to spend less given that we had less revenue.”
According to Governor Parnell, oil production and oil prices are down in the state.
"The production decline and rising cost of producing our oil profoundly impacts Alaska's oil revenues," said Gov. Sean Parnell.
Parnell said some of his goals include creating a fair and balanced approach to oil tax reform.
“The bottom line is we've got to increase production,” said Parnell. “So you'll see me introduce a bill designed to do that. Designed to simplify our tax system, but to also make us more competitive as a state and increase production."
Oil tax reform is something that Senator Hollis French, D-Anchorage, agrees with in theory, but fears that the governor’s oil tax reform will create a problem for the budget.
“The question going forward for this year is how big of a hole will the governor's oil tax bill create in the budget,” Sen. French said. “We're basically running along right now with enough money coming in from our oil taxes to pay for state government.”
French had a negative opinion on Parnell's proposal to cut more than a billion dollars in state spending from the capitol budget.
“Capital spending in Alaska always goes up and down with the price of oil,” French said. “So by reducing capital spending, that's not really a cut it's just less spending for new roads, news schools, new infrastructure.”
In general, Senator French and Governor Parnell both call this budget proposal status quo, proposing a budget that totals $12.8 billion.
The Governor’s budget leaves more than $500 million in surplus revenue if the revenue of oil production and price holds, based on the current estimates.
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