Capitol

The Alaska State Capitol in downtown Juneau. (Photo by Tripp J Crouse/KTOO)

The Alaska Senate approved its version of the operating budget Wednesday afternoon, setting funding at $11.6 billion and rejecting many of Gov. Mike Dunleavy’s massive proposed cuts. The budget for fiscal 2020, which starts July 1, makes significant cuts of $259 million in state spending for government services.

A deficit of about $1.2 billion remains, however; the gap that will likely be filled through dollars taken from the state’s Permanent Fund earnings reserve. The deficit is due entirely to the $1.94 billion it would cost to pay each qualified Alaskan a full $3,000 dividend in October. 

Senate Finance Co-Chair Bert Stedman, R-Sitka, noted on the floor that the budget would have had a $700 million surplus if there were no dividend. Stedman clarified he was not proposing that option but felt the need to identify the numbers. 

Fully funding the dividend, Senate leadership said, will provide a negotiating point with House members, many of whom support a smaller dividend.

The Senate budget is only $2 million less than the operating budget approved by the House last month, but it is $735 million more than Gov. Mike Dunleavy’s proposed budget released in February. 

Cuts

A majority of the $259 million in cuts within the Senate budget are from state spending for the Department of Health and Social Services and Medicaid.

Health and Social Services was cut by $142 million, including $83 million from Medicaid. The other significant cuts include $44 million from the Alaska Marine Highway System, a contentious subject that sustained hefty debate Wednesday on the Senate floor, and $5 million from the University of Alaska budget.

Funding

The Senate proposal fully funds the school bond debt reimbursement program, which is designed to provide financial assistance to schools for construction and capital improvement, K-12 education at last year’s levels and the WAMMI program, which helps Alaska students attend medical school out of state before returning to practice in Alaska.

The Senate adopted three budget amendments Wednesday, restoring $800,000 to the state’s senior benefits program, which was previously threatened by Dunleavy’s February budget proposal. 

The Senate also voted 16-4 for an amendment by Sen. Donny Olson, D-Golovin, that urges the state to immediately pay school districts the $20 million in supplemental education funding approved last year. This has been a sore subject between the governor and the Legislature because Dunleavy proposed to withhold the funding as part of his own supplemental budget. 

The third amendment approved unanimously Wednesday by the Senate reversed a proposal that would have cut 50% from the travel budget for veterans services. 

After wading through 25 amendments — less than half of the number of amendments brought forward in the House last month — the Senate passed its budget 19-1. The bill now goes to a House-Senate conference committee, whose members will iron out differences between the proposals. All Fairbanks-area senators voted for the budget. 

Contact staff writer Erin McGroarty at 459-7544. Follow her on Twitter at twitter.com/FDNMpolitics.