Alaska Dispatch

As the House Finance Committee prepares to sign off on a $7.4 billion operating budget, lawmakers are expressing sticker shock at almost six percent growth.

They know it's a futile protest, with all but about two percent of the swell tied directly to federal rules and formulas. But some are deeply concerned about how to check that growth, expected to continue at similar levels annually well into the future.

Rep. Alan Austerman, R-Kodiak, successfully proposed a new Finance subcommittee that will work through the interim on state spending, better ways to budget, and Alaska's economic future. The group has met once so far, but will buckle down soon now that a heavy schedule of subcommittee meetings on agency budgets has been wiped clear. Serious work starts next week with a presentation by Scott Goldsmith of the Institute of Social and Economic Research. At 3:30 p.m. March 11, he'll talk about Alaska's economy and how it plays into the state's fiscal future.

"The imperative is that we're ready when we need something else," Austerman said. "It's getting control of what the budget has done."

Is Alaska spending too much? Too little?

"We don't have those answers," he said. "We don't know."

As oil production slips and budgets keep growing, concern is bipartisan. Rep. Mike Doogan, D-Anchorage, will participate in the fiscal policy subcommittee.

"We cannot afford to continue to fund the budget that we're going to pass this year," he said. "If oil prices go down substantially, we're in big trouble. Something has got to be done."

House Finance chair Rep. Mike Hawker, R-Anchorage, who supported Austerman's subcommittee proposal, has been involved in similar talks over the years. Alaska's "delicate fiscal regime" is nothing new, he said.

"Anytime the price of oil goes down, we go into crisis mode; anytime the price of oil goes up, we conveniently forget the crises we have when it goes down," Hawker said.

What has changed is the amount of oil flowing off the North Slope, which correlates to money flowing into the state's treasury, and is in a decline that's expected to continue at the rate of six to seven percent a year. State officials are optimistic that new, smaller fields will help provide some balance, but that's several years out and uncertain.

"Our production has declined to the point that no matter how high the price goes, we are facing the very near-term prospect of not having the resources to sustain what we've made fixed commitments by the state," Hawker said.

With roughly $10 billion in savings, not to mention nearly $34.3 billion socked away in the Permanent Fund, this is a tough time to talk program cuts. Yet Austerman wants to be ready for what's ahead.

"When I climb to 30,000 feet and look out onto the future, I see no answers," he said.

Everything is on the table, he said. Do programs initiated by the federal government but sustained by the state work? Are there ways for state prevention spending to nip healthcare costs? What role should government have in addressing social issues? Is the state paying its fair share, or too much, of courts and other things that may be municipal responsibilities?

A key focus will be alternative ways of budgeting that could curb annual growth.

"The budget never gets smaller unless you start really making that happen, and we're not there at the moment," Doogan said.

Any new money put into an agency's base is stuck for good, he said.

"But you can't just do the part of the budget that goes up every year and say that you're doing budgeting," Doogan said. "No matter how we do it, we're going to get to a point where you have to cut stuff."

The starting point should be the spending that's constitutionally mandated, he said. That includes education, health and safety, but doesn't include entire agencies, such as the Department of Environmental Conservation, a relative newcomer to the budget lineup.

"We got along without one," Doogan noted. "Does that mean we're going to zero it out? Well, not necessarily, but there are going to have to be changes made. The better prepared for those changes we are, the better."

Hawker agreed some cuts may have to be made as the state looks to trim expenses.

"You've got to do one of two things -- you've got to spend less or take in more, or touch the third rail of Alaska politics and consider the role of the Permanent Fund in meeting the state's obligations," he said, adding that the subcommittee is not a cover for a raid on that unique fund. Alternatively, a fresh budget plan that checks growth could also curb a move like that.

At the hub of Austerman's plans is public participation -- from individuals, economic development groups, businesses and anyone else with a stake in Alaska's future.

He's planning quite an outreach program. Staff is working out details now for meeting podcasts and updates on Facebook and Twitter, aide Erin Harrington said. Austerman also has a fiscal policy page on his blog.

Contact Rena Delbridge at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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