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AK State House Majority Caucus press release: House Passes Restrained FY '12 Operating Budget


HB108 responsibly invests $8.9 billion towards state agency operations

Juneau, Alaska – The Alaska State House of Representatives today passed the Fiscal Year 2012 statewide operating and mental health budgets. The operating budget passed to the Senate includes responsible investments in state departments and agencies totaling $8.9 billion, with $5.7 billion coming from state general funds.

House Finance Committee Co-Chair Bill Thomas, R-Haines, who led the crafting of HB 108 and HB 109, says the operating budget follows the Majority Caucus’s guiding principle of fiscal responsibility by prioritizing essential state services and commitments like education, health & wellness and public safety.

“This budget is maintenance-level in its approach. We all realize that oil production is declining, but retirement costs and entitlement programs are growing. Building a responsible budget is critical to our state’s long-term fiscal health,” Thomas said. “We have several large general fund drivers in the budget, like Health & Social Services, DOT&PF, Corrections, and education [K-12 & the University], who along with retirement costs and debt service equal 74-percent of the budget. We will continue to work to reduce these drivers where ever we can and found $16.4 million in cuts from the governor’s amended request.”

K-12 Education spending and pupil transportation ($1.14 billion,) the University ($663 million,) and the Dept. of Health & Social Services ($1.08 billion) are the main drivers of general fund investment. Deposits into the State’s retirement systems totaled more than $479 million to offset unfunded liabilities.

The committee forward-funded K-12 education for Fiscal Year 2013 and fully-funded the Alaska Heating Assistance Program - which includes the federal Low Income Home Energy Assistance Program - $21 million, Power Cost Equalization ($34 million) and Municipal Revenue Sharing ($60 million).

“We have what many have called the Alaska disconnect, where the average Alaskan doesn’t have any direct connection to state spending because they don’t pay much into state government,” Thomas said. “We all have wants and needs but we can’t be everything to everybody. According to the Dept. of Labor, in 2009 we had 342,652 Alaska resident workers. If the General Fund cost of the budget had to be paid by Alaskan workers, each one would owe $16,632. It’s not going to happen like that, but it’s my hope that Alaskans will think about that – in context – so we can separate what services are merely wanted from what services are truly needed in the future.”

“The House reduced the governor’s request, but the fact remains that it takes $83 per barrel oil to balance the budget, and that makes budgeting difficult in times of lower oil production,” House Speaker Mike Chenault, R-Nikiski, said. “I’m thankful that our Co-Chair and Subcommittee Chairs tamped down on state spending, and look forward to the continued discussion of how to slow government growth and re-open Alaska to business and investment.”

The House passed the operating budget by a vote of 36 to three, and the mental health budget unanimously. They now move to the Alaska Senate for consideration.

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