Morning Headlamp – Senate-Planned Budget Cuts Under Scrutiny

Does the House have the votes?  The House Majority’s income tax bill may not have the votes to pass the House. With two majority members not yet willing to be yes votes, the bill’s passage is in question. Headlamp hopes the income tax (which is being called “broad based” but certainly isn’t with only 40% of Alaskans paying it) can’t get out of the House, but if it does, we hope the Senate stays strong.

Senate reduces budget. The Alaska Senate’s majority has pledged to cut $300 million from the state budget as part of its deficit-reduction plan. But while the Senate’s latest spending plan would use $262 million less next year from the state’s unrestricted general fund, the real reduction in the size of government will be far less. That’s because more than $100 million in Senate cuts from the unrestricted general fund would be replaced with spending from other accounts, or in future budgets. Budget hawks and conservative lawmakers have been scrutinizing the new Senate proposal since the majority unveiled it Monday. The Senate leader in charge of the state operating budget, Bethel Democrat Lyman Hoffman, said he didn’t want to debate the details, even as he argued that the “black and white of it” was that the budget was being cut by some $300 million. Majority members say they can avoid new taxes by reducing dividends and cutting $750 million in general funds over the next three years — starting with this year’s $300 million.

Railroad reports first loss since 1999. The Alaska Railroad Corporation reported a net loss of $4.4 million in its 2016 annual report released this week, its first annual loss since 1999. In a news release, the railroad said the loss was the result of “continued declines in historic freight lines” and an impasse with the Municipality of Anchorage on how to split about $15 million in federal transit funds. The railroad’s $4.4 million net loss last year compares to a net income of $10.9 million in 2015, according to the annual report. The last time the railroad had a net loss was in 1999, when it reported a loss of $3.8 million. In addition to the battle over federal funding, the railroad last year saw freight revenue drop 16 percent compared to 2015, and more than 44 percent since 2008. A number of factors, including a 23 percent drop in petroleum product shipments to the Interior compared to 2015 and a collapsed coal market, played a role, the railroad said.

 

First Reads

Alaska Senate’s cuts are close to $300 million on paper. But their effect on spending will be far less.

Alaska Dispatch News, Nathaniel Herz, April 6, 2017

Alaska Railroad lays some blame on Anchorage for $4.4M loss in 2016

Alaska Dispatch News, Annie Zak, April 6, 2017

Renewables boom; Total U.S. energy consumption inches up

Fuel Fix, David Hunn, April 5, 2017

House ‘working on’ votes to approve income tax
Alaska Journal of Commerce, James Brooks, April 5, 2017

Tempers flaring as House, Senate spar over budget fixes

Alaska Journal of Commerce, Tim Bradner, April 5, 2017

Budget crisis highlights need for spending cap
Alaska Journal of Commerce, Jeremy Price, April 5, 2017