ANCHORAGE -

Saying Alaska has to live within its means, Gov. Sean Parnell has proposed a $12.4 billion budget for fiscal year 2015 which includes $1.3 billion and 150 job positions in cuts.

Speaking at the Dena’ina Center in Downtown Anchorage Thursday, Parnell says cost savings will also be achieved by streamlining costs in the form of more efficient office space for state employees.

Parnell also addressed his recent rejection of a federal expansion of Medicaid, telling reporters that accepting federal funds to provide health coverage for about 40,000 Alaskans wouldn’t help the state’s children and grandchildren -- whom he didn’t want to saddle with debt.

Despite the cuts, Parnell says he’s fully committed to funding infrastructure and K-12 education, as well as adding more Alaska State Troopers and village public safety officers. He also mentioned plans to pay down the state’s unfunded pension liability.

The total current-year budget is $13.4 billion.

Other initiatives maintained in the budget include Parnell’s “Choose Respect” campaign against domestic violence, state-supported merit scholarships and deferred maintenance of public infrastructure.

Bigger-ticket items include $10 million for the proposed Susitna-Watana dam, $20 million toward completing university engineering buildings, $31.5 million for school construction and a $3-billion savings transfer to address the state's pension shortfall.

In a statement responding to Parnell’s proposal, four of the state Senate's five Democratic minority members -- Sens. Johnny Ellis, Hollis French, Berta Gardner and Bill Wielechowski -- sharply criticized his planned budget, linking it to severe reductions in revenue accompanying the passage of Senate Bill 21’s oil tax reforms.

“Prior to last year, Alaska had enjoyed a string of record budget surpluses, which enabled the bi-partisan led Senate to save nearly $17 billion,” minority members wrote. “This Administration, in just a few short years, has transformed multi-billion dollar surpluses into multi-billion dollar deficits.”

Parnell has said he would introduce a budget that gives lawmakers some room to add though he said he would work with them on an overall spending cap.

Editor's note: The count of the state Senate's minority members has been corrected to five, from an initial statement that it was four members.

Channel 2's Corey Allen-Young and the Associated Press contributed information to this story.