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'Gloom and doom': budget deficit looms large for legislators and locals


As the 29th Alaska State Legislature reached the halfway point of this year's session last week, Jonathan Kreiss-Tomkins, House District 25 representative, stopped in Petersburg to talk about legislature issues with a local impact.

By far, the budget is the largest issue facing this year's legislature, Kresis-Tomkins said.

"I ran into someone yesterday and we were talking really briefly about it and I mentioned I felt like a pallbearer at a funeral because of the budget," he said. "Gloom and doom is kind of the mood."

That's because the state is facing a $3.6 billion dollar budget deficit and spending $10 million in savings each day to make up for the shortfall, according to a report on the state budget from Governor Bill Walker's office.

The report outlines some $14 billion in savings to help cover the gap, but at the current price of oil, those savings are slated to run out in 3-6 years.

Kreiss-Tomkins said the scale of the budget deficit is hard to understand, equating to about 50 percent of the current total budget.

To get a sense of that scope, Kreiss-Tomkins gave this example: "The legislature could eliminate the budget, they could let every state employee in Alaska go, be fired, and we'll have only covered about 40 percent of the budget shortfall."

He added that an increase in oil prices isn't the magic bullet for the state, though, because of the current tax structure.

"Because of our new tax regime, the SB21 that we had the referendum about, the state of Alaska actually gets a very small share of the profit if oil were to become extremely expensive again," he said. "So actually high oil prices is not necessarily a savior for the state because of our new tax regime."

Walker has submitted a budget to legislature which is now being hammered out by the House Finance Committee.

"There are going to be cuts that people are going to see in their daily lives," Kreiss-Tomkins said. "The ferry service is going to be cut back, education funding is going to be cut back...So there's going to be a laundry list of programs and curtailments that people see and are affected by."

That includes the loss of some 300 jobs statewide.

Looking locally at State cuts

Locally, Borough Manager Steve Giesbrecht said Petersburg is looking to lose about $1 million in revenue.

The federal Secure Rural Schools funding isn't likely to get renewed. Of the $1.3 million received, $600,000 is used to support Petersburg schools' operating budget while the rest goes into an account for capital projects.

There are still state cuts education will have to face as well.

"It appears, at this point, we're going to lose about half" of the community jails program, Giesbrecht added, which is $320,000 a year. That's going to be one of those "down to the wire adjustments" Petersburg will have to make as changes are made almost daily.

Then there's going to be an impact on community revenue sharing, which is about $535,000 a year.

"We've been told to expect major cuts with that," Giesbrecht said, noting the borough has budgeted for about a quarter of a million.

And there's other potential cuts the borough hasn't been able to include in the list yet.

It's already eliminated the program coordinator position in Parks and Recreation, saving about $65,000 a year. The department, along with the library, has been asked to make further cuts, and borough staff are examining other departments.

For its size, Giesbrecht noted that Petersburg receives many services, such as a hospital and pool, which similar sized communities don't have.

He'd like to get the community involved to see if they have any ideas for raising revenue and "what services do they think we can do without."

The elderly exemptions have become concerns with a growing population qualifying for them, Giesbrecht noted. The borough has no control over the senior citizen property tax exemption, about a $150,000 value.

But it does have control over the senior sales tax exemption, which it's already tried to eliminate once. That could be revisited, Giesbrecht added.

If it wasn't for the borough formation, he added, Petersburg would be in big trouble right now. The additional revenue from taxes resulted in surpluses.

The Assembly could pull money from the contingency funds being saved for remodeling the police station and jail, too, but it's been the "community's number one priority" for the safety of officers and prisoners, he said. Last year, $950,000 was deposited for the work, and in all but about $4 million has been set aside for the estimated $10 million project, he added.

"It's going to take a community effort" to keep life in Petersburg moving, Mayor Mark Jensen said at a special Assembly meeting with the hospital board Monday evening.


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