ANCHORAGE (KTUU) — Changes are likely on the way as lawmakers consider Gov. Dunleavy's proposed plan to implement an austerity budget to pay for full dividends.
That's the message from one of the key decision-makers in Juneau who made a stop in Anchorage Tuesday to talk about the governor's budget that includes $1.6 billion in proposed cuts.
"I don't really think we have a fiscal crisis, I think we have a priority crisis," said Senate Finance Committee Co-Chair Sen. Natasha von Imhof, R-Anchorage, at the Anchorage Downtown Rotary Tuesday. There, von Imhof presented a review of the budget and the budget process, and heard from constituents.
Sen. von Imhof laid out the choices faced by lawmakers: accept the budget as proposed, keep using the Alaska Permanent Fund to pay for state services, increase revenue through taxes, like an income tax or oil tax credit reform, or a combination of some or all of the available options. von Imhof noted that the Permanent Fund Dividend under the governor's proposed budget makes up 37 percent of all general fund spending.
"$1.9 billion could actually cover the general fund budgets for 12 agencies — Administration, Commerce, Corrections, Education, Environment, Fish and Game, Labor, Law, Military, Natural Resources, Revenue, and the university," von Imhof said, making the case for a budget that represents a mix of agency spending cuts and a reduced PFD.
"Right now, our budget is very heavy on paying a Permanent Fund Dividend at $3,000 per person, at the expense of funding education, the university, the ferry, medicaid, and so forth," von Imhof said. "I think that somehow, a choice that decreases the dividend a bit, and increases some of the funding back, down the middle, a blended balance of sorts between the dividend and cuts is probably our best option."
She says that without much time for preparation, it's difficult for any agency to absorb significant budget reductions.
"In the terms of medicaid, there are a lot of third party requirements to be able to carry out the medicaid reductions, such as permission from the federal government with the centers of medicaid and medicare for one, and those letters and permission take several months if not several years to receive, and we may not get that before July 1."
Sen. von Imhof said some of the other options moving forward are phasing in spending cuts over two or three years, allowing agencies time to explore options for how to operate more efficiently without having to absorb the full amount of budget cuts in just a matter of months.