Dear Friends and Neighbors,

This week, the legislature passed a statewide operating budget and a capital budget. Passing this budget compromise means the state has avoided sending lay-off notices to state employees. Although passing the budget is a step in the right direction, the legislature has not adopted a long-term solution to Alaska’s financial challenges. There is more work to be done to implement a responsible action plan for Alaska.

Legislature Approves Operating and Capital Budget

The legislature approved a budget compromise to avert lay-off notices and a potential government shutdown, but the passage of the budget does not include a long-term solution to the deficit. In our current fiscal year (FY16), Alaska is spending $5.1 billion in unrestricted general funds for operations. Governor Walker suggested a reduction to $4.5 billion, and the budget passed on Tuesday reflects an even larger reduction for FY17 to $4.26 billion in unrestricted general funds. This amount is a $814 million cut from FY16. The capital budget for FY17 totals $102 million in unrestricted general funds, which is a $33 million cut from the FY16 budget of $135 million. Without a long-term fiscal plan, funding the $4.37 billion unrestricted general fund budget required a $3.26 billion draw from the Constitutional Budget Reserve (“CBR”) saving account. Filling the deficit with the $3.26 billion withdrawal from the CBR means we’re paying for 75% of the cost of government with our savings.

I voted “no” on both the budget and the $3.26 billion withdrawal from the CBR because the budget compromise is not part of a long-term fiscal plan. West Anchorage residents have told me time and again that we need to address cost savings and revenue at the same time. We need a responsible action plan for Alaska that addresses both revenue and spending, and we need a plan this year.

The budget compromise maintains a commitment to education by restoring funds for early learning programs, K-12 education, and the University of Alaska. Despite the need for smart budget cuts, however, the budget compromise still includes costly mega-projects, such as the Juneau Access Road, the Susitna-Watana Dam, and the Knik Arm Bridge. The failure to make these smart budget cuts is another reason why I voted “no” on the budget. Finally, with similar withdrawals from the CBR in future years, the state will drain that entire savings account in 2-3 years. Even though we’ve passed a budget compromise, we have more work to do.

Rep. Claman speaking on the House Floor.

Foster Care and Adoption Reform Approved

This week, we also passed the Child Protection and Opportunity Act (HB 27) and needed reforms to Alaska’s adoption laws (HB 200). The Child Protection and Opportunity Act (HB 27) will help get foster youth in state custody into stable, permanent homes and out of foster care. The adoption reform bill (HB 200), proposed by the Walker-Mallott administration, assures that adoption proceedings will allow more children, including Native children, to find permanent care with relatives or tribal members.

Oil and Gas Tax Reform, Revenue, and Permanent Fund Protection

With passage of the budget compromise, the special session continues. We are considering reforms to the oil and gas taxes and subsidies; a group of revenue bills including increases to motor fuel, fishing, and mining tax; a proposed state income tax; and a bill that would protect the Permanent Fund for future generations while stabilizing the funding for state government. I will continue to review these proposals in the context of our financial challenges and the need for a responsible action plan for Alaska.

Thank you to the brave men and women who fought for our freedom. Our nation is ever grateful.

Sincerely,

    Rep. Matt Claman

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