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By DAN ORTIZ
Gov. Bill Walker submitted a budget plan for the upcoming fiscal year. The proposed budget includes a direct increase of $34 million in public safety Investments, funding for Medicaid, health care reform strategies, and deferred maintenance projects within the state.
Unrestricted general fund revenue is projected to be about $2.1 billion while spending is nearly $4.6 billion, leaving a deficit of approximately $2.5 billion. This is troubling because the state has nearly exhausted its savings account, the Constitutional Budget Reserve Fund. The fund balance is currently only $2.2 billion, of which only a maximum of $1.2 billion should be withdrawn to leave a $1 billion safety net. This is not sufficient to fill the $2.5 billion budget deficit. Gov. Walker’s plan to fill this gap is to transfer money from the Alaska Permanent Fund Earnings Reserve Account into the state’s general fund, and to appropriate funds from the CBR and the Statutory Budget Reserve Fund.
The budget also introduces the Alaska Economic Recovery Act, which will bring in roughly $800 million over three years. The Recovery Act introduces a 1.5-percent wage tax, which is capped at two times the Alaska Permanent Fund dividend amount, or $2,200. In real terms, households earning $64,000 per year will pay roughly $960 in payroll taxes to the state. Households earning $147,000 per year or more will pay $2,200, or twice the PFD amount, whichever is smaller.
This tax (set to sunset after 2.5 years) is designed to fund deferred maintenance projects, and will only cover proposed increases in funding, rather than closing the deficit. For Alaska communities, this means increased funding for high-value capital projects and the jobs that come with them. School maintenance, EMS funding, transportation infrastructure and senior housing will be covered by this plan, which means critical repairs to the Houghtaling Elementary School roof and Pioneer Home are projects listed to be funded in the bill.
The proposal also includes an increase in motor fuels tax, an approximate PFD of $1,200, and calls for budget reform on a broad level. This budget reform legislation withholds salaries and per diem if the governor and Legislature fail to pass a budget by their respective deadlines, and introduces a shift to biennial budgeting. This means that the governor and Legislature would be tasked with passing two budgets in one session to give legislators time to address other policy issues and avoid prolonged budget negotiations every year.
I rely on the input from constituents to make informed decisions. I strongly encourage each one of you to make comments and suggestions regarding the governor’s budget. I recently released a 2018 session priority survey that can be found at https://www.surveymonkey.com/r/33L7L6T. Feel free to email me at Rep.Dan.Ortiz@akleg.gov any time.
Rep. Dan Ortiz, I-Ketchikan, represents House District 36 in the Alaska House of Representatives.