JUNEAU, Alaska (AP) — Gov. Sean Parnell on Wednesday proposed a spending limit of nearly $6.8 billion in unrestricted general funds for next fiscal year — more than $1 billion less than in the current year.
The proposed cap comes with 2 ½ weeks left in the regular session and with the Senate expected this week to pass a $9.9 billion state operating budget, $5.8 billion of which is unrestricted general funds.
That fund designation refers to money that is not restricted in its use by the law, constitution or other things. As the Department of Revenue points out, that's the money that most legislative and public debate centers around.
Authorized spending for this budget year includes about $7.9 billion in unrestricted general funds, said Parnell's budget director, Karen Rehfeld.
Oil revenue provides about 90 percent of the state's unrestricted revenue, and Parnell has been pushing for a spending cap — as he has in the past. He also wants a five-year fiscal plan, with forecasts calling for continued production declines and the state facing the prospect of having to dip into savings to cover costs for the current year.
Parnell has proposed an oil tax overhaul as a way to boost investment and production that could cost the state up to $875 million next fiscal year alone, under the latest version of the bill. Parnell has said the state will manage the near-term hit — three to five years — using savings, with the expectation that any tax change will lead to more production. The state has about $16 billion saved between two reserve funds.
"We have the savings to do that now," he said in an interview last week. "We won't have it if we just continue down this same path of decline and spend from savings with declining production."
Critics of the tax plan say it's a giveaway to oil companies with no assurances of what Alaska will get in return.
Parnell on Wednesday said the tax bill, SB21, "offers an Alaska comeback in oil production." He said the version of the bill that passed the Senate and is now under consideration in the House "will put us on a path to reclaiming our standing as America's greatest oil-producing state."
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