Legislators may avert some property tax hikes with latest version of state budget

JUNEAU — Lawmakers in the Alaska House and Senate have reached agreement on a portion of the state operating budget that preserves funding for a school bond debt reimbursement program, an act that could avert the need for significant property tax increases across the state.

Legislators have not finished their work on a House-Senate compromise budget, but elements approved Monday evening provide full funding for the state’s school bond debt reimbursement program. The Municipality of Anchorage had estimated a $630 property tax increase for a $350,000 home in 2020 if the program was not funded.

The funding is not fully secure until Gov. Mike Dunleavy signs the state operating budget, and after lawmakers decide whether or not to override any vetoes the governor might make, but Monday’s action is a major step as lawmakers attempt to resolve differences over the budget before the regular session concludes Wednesday.

Lawmakers have said that a long-awaited anti-crime bill, together with the state budget and legislation setting the amount of this year’s Permanent Fund dividend, are the three prerequisites for adjournment.

The crime bill is scheduled for a vote in the Senate on Tuesday morning, and members of the House and Senate have been meeting regularly on a budget compromise.

Work on the dividend has been less fruitful.

“We’re still working on it. There will be a dividend in October, is about all we can say. There is no intent to not have a dividend,” said Sen. Bert Stedman, R-Sitka and co-chair of the Senate Finance Committee.

“We continue to work with Senate leadership on that, and there has not been a decision made on that at this time,” said Rep. Tammie Wilson, R-North Pole and co-chair of the House Finance Committee.

Work on the budget is scheduled to continue at 10 a.m. with another meeting of the House-Senate conference committee.

That committee, consisting of three members from the House and three from the Senate, has been assigned to come up with a compromise state operating budget. The House and Senate passed different versions of the budget earlier this year after discarding most of the cuts and cost shifting proposed by Gov. Mike Dunleavy in February.

The result is still expected to cut more than $200 million and may be the largest year-over-year cut in state history.

In addition to the school bond debt decision, conferees agreed to cut $5 million from the budget of the University of Alaska and preserved the fee-funded Ocean Ranger program that places neutral pollution observers aboard cruise ships.

The governor had proposed cutting that program, which is paid-for by the cruise industry, but legislators balked after a lawsuit in federal court revealed a Holland America cruise ship dumped thousands of gallons of contaminated water into Glacier Bay. The company was fined $250 by the state.

In a morning meeting, conferees agreed to cut $70.3 million from the state’s Medicaid program. In February, the governor proposed cutting hundreds of millions of dollars from the program, which covers health care for about one in four Alaskans.

Those cuts were later discovered to be impossible to implement in one year, and the administration suggested a revised plan including $91 million in cuts. The House was willing to accept $58 million in cuts; the Senate had been willing to accept $82.6 million; the resulting compromise is between those figures.

Over the objection of Rep. Neal Foster, D-Nome, conferees also approved conditional budget language saying that no Medicaid funding “may be expended for an abortion that is not a mandatory service required under (state law)."