House leader says no to expense cuts for legislators but backs deep cuts to schools

JUNEAU — An Alaska House leader on Monday unveiled a proposal to slash some $50 million in assistance payments to municipalities for school district bonds, while at the same time blocking a plan to cut $14,000 from each legislator's annual expense payments.

Homer Republican Rep. Paul Seaton, co-chair of the House Finance Committee, says he wants to cut more than 40 percent from the $116 million proposed by Gov. Bill Walker for school bond debt reimbursement — a program that helps districts pay for construction and major renovation projects.

Based on the state's projected reimbursement for each school district, the cut would amount to a roughly $18 million hit for Anchorage alone, where the school board last week approved a new budget eliminating 100 teaching positions.

[Anchorage School Board cuts dozens of teaching positions, and the situation could get even worse]

"My first reaction was, 'Are you kidding me?'" said Tam Agosti-Gisler, the president of the Anchorage School Board. "We will speak out loud and clear that we are not in favor."

Agosti-Gisler said in a phone interview late Monday that the proposed cut would be "disastrous" — though she added that it's the municipality, not the school district, that guarantees the outstanding construction loans in the form of bonds.

The school board, she added, already helped fill a deficit created last year when Walker vetoed 25 percent of the reimbursement program's annual budget — and Agosti-Gisler suggested that any budget cuts or increased taxes in response to Seaton's proposal would be the responsibility of the Anchorage Assembly.

Seaton's plan hasn't been publicly discussed; it appeared Monday on a legislative website along with other House budget proposals for state agencies that were openly vetted in subcommittee meetings.

A separate proposal from Seaton also emerged Monday to halve the $74 million in Walker's budget proposal to pay cash tax credit subsidies to oil and gas companies.

The House Finance Committee is expected to consider both proposals at a Tuesday meeting as it hunts for budget reductions to help close the state's $3 billion deficit.

There was no immediate indication whether Seaton's ideas would have support from other members in his House majority coalition, which is largely made up of Democrats who have vehemently opposed cuts to public schools.

Even deeper cuts to schools are expected from the Republican-controlled Senate, whose leaders have warned of a 5 percent reduction, or about $65 million, to the state's education budget.

In a brief interview Monday evening, Seaton described his proposals as a necessary complement to the majority coalition's deficit-reduction legislation, which would levy a state income tax and divert some of the investment earnings of the Alaska Permanent Fund to help pay for government programs.

"We need to have some cuts to address the big deficit we have, as well as revenue," said Seaton.

His unexpected proposals had lobbyists and advocates scrambling to understand them Monday afternoon, with opposition stirring by the evening.

The proposed cut to the oil company subsidies "hurts the very companies the credits were designed to attract to Alaska," Kara Moriarty, president of the state's main oil industry group, the Alaska Oil and Gas Association, said in a text message.

Seaton's ideas emerged as he blocked the proposal to reduce lawmakers' expense payments to cover lodging and meals, which are $213 a day. Juneau legislators are paid a reduced rate of $160, even as they sleep in their own homes.

Seaton voted for the reduction Thursday in a unanimous decision by a House finance subcommittee made up of legislative leaders. But at Monday's meeting of the full House Finance Committee, he said he wouldn't allow it to move forward, because another committee — the joint, bipartisan Legislative Council — has authority over the rate of the "per diem" payments.

Seaton also told a reporter during a break from Monday's meeting that the subcommittee's decision cutting per diem last week was hasty and needed further review.

"It was a system that really needs a lot more thought," Seaton said.

CORRECTION: An earlier version of this story said the assistance payments for school bonds were paid to school districts. The payments, which lower the cost of borrowing for schools, are actually made to municipalities.