JUNEAU -- The Alaska Senate Finance Committee on Wednesday proposed to cancel annual cost-of-living increases for state employees, a measure designed to help close a multibillion-dollar budget deficit by shaving $30 million from unrestricted general fund spending next year and $57 million in total.
The proposal -- presented as amendments to the state operating budget -- passed without objection, although Sen. Click Bishop, a former state labor commissioner and official with the Operating Engineers local in Fairbanks, said he didn't support it.
"If we don't pay the raises, layoffs are less likely," said Sen. Pete Kelly, R-Fairbanks, the co-chair of the committee.
He added in an interview afterward the state's union contracts were negotiated when the price of oil -- which funds the vast majority of state government -- was at $100 a barrel. It's now closer to $50 a barrel.
The committee's action provoked a sharp response from the state's largest employee union, the Alaska State Employees Association. If the committee action stands, union members would lose 2.5 percent wage increases starting July 1, after they settled for 1 percent increases in the previous two years of their contract.
"We understand that there's a deficit position," executive director Jim Duncan said by phone from Cabo San Lucas, Mexico, where he was taking personal leave.
But, Duncan added, members "gave up other benefits and increases to arrive at a three-year contract. And to break that contract in the final year is just completely unacceptable."
Duncan said he'd be urging his members to contact legislators to tell them not to approve the Senate Finance Committee's proposal. If the action stands, Duncan said, he'd appeal to Gov. Bill Walker to veto the relevant budget language.
The budget package already passed by the House does not contain the same language, meaning that a final action on the contracts would have to be negotiated between the two chambers.
The Senate Finance Committee's proposal applies to 14 state unions. One of the amendments also applied to non-unionized employees, including those who work for the Legislature and in Walker's office.
A legislative budget official testifying before the committee Wednesday said the changes for non-unionized employees would also require legislation that's forthcoming. The legislation was introduced in the House on Wednesday morning.
Most public employee union contracts are negotiated by the state Department of Administration. Deputy commissioner Leslie Ridle said in phone interview her department would have to examine each contract following the committee's decision.
The contracts are on staggered schedules, meaning some employees would forgo increases smaller than those expected by ASEA.
"We will be working with each union just to make sure that we're following the contract that we passed," Ridle said.