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Senate Passes Sustainable Budget


JUNEAU – The Alaska Senate Majority passed a sustainable operating budget today, reducing state spending by $276 million after a precipitous drop in the price of oil left the state with a multibillion-dollar budget shortfall.

The Senate’s version of the operating budget, House Bill 57, proposes $4.1 billion in unrestricted general fund (UGF) spending, down from a high of $8 billion in Fiscal Year 2013.

“If a family loses north of 60 percent of their income, they are going to have to tighten their belts,” said Sen. Lyman Hoffman (D-Bethel), co-chair of the Senate Finance Committee. “To help address the fiscal problem, we asked the state’s largest agencies to cut a nickel on the dollar.”

The substantial savings were largely achieved by reducing spending on the state’s four most significant cost-drivers by five percent, including the Department of Health & Social Services, Education, the Department of Transportation and the University.

“Cutting is never easy, but it is necessary given our current fiscal situation,” said Sen. Anna MacKinnon (R-Eagle River), co-chair of the Senate Finance Committee. “The Senate Majority prioritized the needs of Alaskans in this budget. We will continue to look at legislation to reform the way government operates in order to further reduce spending through efficiencies and restructuring.” 

The Senate’s budget, coupled with Senate Bill 26, provides significant protection to the Permanent Fund. The House’s version of the budget, in contrast, proposes to draw $4.2 billion from the Permanent Fund’s earnings, totaling $1.7 billion more than the Senate’s $2.5 billion draw.

“The Senate made good on its promise to make further reductions to the budget and reduce the size and scope of government,” said Sen. Pete Kelly (R-Fairbanks), President of the Alaska Senate. “The Senate’s fiscal solution will protect the dividend, protect Alaskans from an income tax and protect the private sector.”

HB 57 is now on its way to the Alaska House of Representatives for concurrence.


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