This story was originally published by the Alaska Beacon.
Members of the Alaska Legislature said this week that they’re likely to use the state’s Constitutional Budget Reserve to fix a roughly $173 million budget deficit for the 12 months that end June 30.
Lawmakers are confronting another, larger deficit as they craft the budget for the fiscal year that begins July 1, but it remains possible that some tax increases — on oil, business income and online sales — could offset the need to spend from savings for that year.
When it comes to the current fiscal year, things are more certain. Passing new taxes and implementing them would take time, and the state’s budget needs to be balanced by June 30.
While members of the Senate’s bipartisan coalition majority previously rejected the idea of spending from savings, they admitted this week that there is no other option.
“Times change, things change, and sometimes you have to eat crow up here,” said Senate President Gary Stevens, R-Kodiak, during a news conference with reporters.
Spending from the state’s $2.8 billion Constitutional Budget Reserve will require the approval of three-quarters of the state Senate, plus three-quarters of the state House.
Reaching those thresholds will require the support of the Republican minority caucuses in both the Senate and the House. It isn’t clear what political horse-trading — if any — will be required to get the needed Republican support.
About half of the deficit in this year’s budget is attributable to lower-than-expected oil revenue. The other half is due to budget changes proposed by Gov. Mike Dunleavy, whom the Republican minority caucuses generally support.
Among the budget additions: $10 million for the Alaska Seafood Marketing Institute, millions for wildfire firefighting, and $2.7 million to cover missed payments by the state to employees’ retirement accounts.
As of Wednesday afternoon, members of the House Finance Committee were debating the use of the budget reserve for the upcoming fiscal year as well as the current one, but those debates had yet to reach a resolution.
James Brooks is a longtime Alaska reporter, having previously worked at the Anchorage Daily News, Juneau Empire, Kodiak Mirror and Fairbanks Daily News-Miner. A graduate of Virginia Tech, he is married to Caitlyn Ellis, owns a house in Juneau and has a small sled dog named Barley.
