- Associated Press - Tuesday, April 21, 2015

JUNEAU, Alaska (AP) - Members of the Senate Finance Committee on Tuesday defended the budget the Senate passed, including proposed cuts to education, as responsible.

A co-chair of the committee, Sen. Anna MacKinnon, said there is room for compromise. But she said she will “not be held hostage to spend more money that we don’t have. Period.”

Committee co-chair Sen. Pete Kelly told reporters the state has fallen off the fiscal cliff and the Senate budget, which cut more deeply than Gov. Bill Walker or the House proposed, is an effort to save Alaska’s financial future.

“It’s important, I think, that the people of Alaska, and maybe some people in this building, understand the magnitude of the budget problems that we have,” Kelly said, adding later that the message coming from the Senate boils down to: “We don’t have the money.”

Failure to reach a budget deal sent the Legislature, which had been scheduled to adjourn Sunday, into overtime.

While many in the House expected further cuts to the operating budget in the Senate, education funding became a sticking point in budget negotiations. Closed-door talks continued Tuesday.

The Senate proposed cutting $47.5 million for schools next year and did not forward-fund education for fiscal year 2017. That’s on top of a planned cut in the one-time schools funds that was approved last session. Walker first proposed that cut.

The Senate did add to the capital budget $43 million for a new school at Kivalina to help satisfy terms of a settlement agreement in lawsuit over inequities in rural school funding. Walker had proposed phased-in funding.

House Minority Leader Chris Tuck has said his Democratic-led caucus wants to see the $47.5 million restored, along with $32 million in one-time funds that had been planned for next year and some mechanism for inflation-proofing the per-student funding formula.

The caucus also has wanted to see negotiated pay raises in labor contracts funded for next year and expanded Medicaid. Democrats don’t dispute the need for cuts but say they must be made smartly.

This session, it has been expected that a three-fourths vote would be called for to draw funds from the constitutional budget reserve to help balance the budget. In the House, reaching that threshold will require Democratic support. Negotiations have been occurring between the House and Senate and between the House majority and minority.

Tuck said Tuesday that the process so far has been respectful. “It’s nice to be working side by side where in the past we’ve always been working underneath everyone,” he said.

“We are not interested in blowing up a budget. We know cuts need to be made,” said Tuck, D-Anchorage. “We’re just worried about going too deep and going in some areas unnecessarily just because we’re trying to meet a number.”

Senate Finance members who are in the majority said everything must be on the table as the state grapples with multibillion-dollar budget deficits amid low oil prices and trying to preserve its reserves for as long as possible.

Committee members said that if people think this year was tough, it won’t get any easier. The focus this session has been on cuts; talks on additional revenue sources are expected to begin this summer.

MacKinnon, R-Eagle River, said the Senate is willing to compromise. But she said the proposed $47.5 million school funding cut seems reasonable as a first step to asking education to help come up with new innovations.

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