- Associated Press - Friday, February 22, 2019

JUNEAU, Alaska (AP) - Gov. Mike Dunleavy’s budget proposal is the perfect tool for asking Alaska residents if they want a spending plan that goes to extremes or if they are open to broader discussion, a Republican state lawmaker said Friday.

Sen. Peter Micciche of Soldotna said Alaska residents can help decide if they want to “live essentially like cavemen” without services they count on or if they want to find a different balance.

Dunleavy, a Republican who took office in December, has proposed addressing a projected $1.6 billion deficit for the coming fiscal year with sweeping cuts and tax collection changes that would benefit the state but pinch some boroughs and municipalities.

He also has proposed a full dividend payout to residents this year from the state’s oil-wealth fund, the Alaska Permanent Fund, estimated to cost $1.9 billion, and no new statewide taxes.

Dividends were capped the last three years amid the ongoing deficit debate. The state currently has no statewide sales or personal income tax. The appetite to revisit oil taxes appears tepid.

Micciche told reporters that if his constituents want a full dividend, he’ll push for that. But he said the effect of the current budget plan is to shift costs locally - meaning Alaskans would have to pick up some of the slack.

Micciche said Dunleavy’s budget is the perfect tool to hold up and say, “if you want to go extreme on one side, this is what it looks like. But if you want a better balance, let’s talk about that.”

Both Senate President Cathy Giessel and Micciche said there is room to cut the budget but Micciche noted that $1.6 billion is a huge leap.

Areas eyed for major cuts or changes include K-12 education, the university system, Medicaid and the Alaska marine highway system. The ferry system hasn’t scheduled sailings after Oct. 1; Dunleavy wants to consider alternate management options.

Giessel, an Anchorage Republican, likened the state’s fiscal situation to a kid who, instead of cleaning his room, shoved things under his bed or in the closet. “We’re in the year where we’ve opened the closet and everything’s falling out on us because we didn’t put things away as we should have over the years,” she said.

The state for years has relied on savings to fill the deficit but has seen its options dwindle amid disagreements over taxes and the level of continued cuts. The state began using permanent fund earnings last year to help pay for government expenses, and some lawmakers say they want to avoid overspending from that account.

Taxes are not under consideration at this time, said Giessel, who leads a primarily Republican majority.

Senate Democratic Leader Tom Begich told reporters recently that regardless of Dunleavy’s position on issues like taxes, lawmakers have an obligation to provide services to Alaska residents in a reasonable way.

The House’s new bipartisan majority has just begun formal budget hearings after taking a month to organize.

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