Alaskan economics are connected to Petroleum prices. The price of petroleum is down and the state budget is under attack. The legislature and Gov. Bill Walker estimate the yearly budget deficit is between 3.2 to 3.4 billion dollars. There are only two ways to balance the budget; one is to reduce state spending and the other is to raise revenues.
In an effort to reduce state spending the Governor has recommended cutting senior benefits by 25 percent. Senior benefits only go to those seniors whose incomes are between 75 and 175 percent of the federal poverty level. Federal poverty guidelines for an individual are $14,720, and $19,920 for a couple. In short, approximately 10,000 Alaskan seniors will be negatively affected. Reducing or eliminating senior benefits will have the net effect of placing one tenth of Alaska’s seniors in poverty.
To Governor Walker’s credit he recommended Medicaid expansion, since it would provide benefits to the poorest Alaskans and create 10,000 new health care jobs. Ninety percent of the expansion cost would be covered by the federal government.
The state House of Representatives recently removed the Medicaid expansion from the Health and Social Services budget, thereby requiring the Governor to file a separate standalone bill for the expansion of Medicaid. It is likely the Governor will introduce a standalone bill dealing with the Medicaid expansion; but questionable whether the legislature will pass it into law.
The Governor can make budget cut recommendations but the legislature must implement the cuts through its appropriation process. In short, the legislature ultimately makes the decisions regarding how much money will be spent by the state. If the legislature cannot find $3.2 to $3.4 billion in state expenses to cut, it must find revenue. Revenue enhancement cannot happen through appropriation but will require legislation.
The low hanging sources of revenue enhancement are: 1) state income tax, 2) state sales/excise tax, and 3) permanent fund earnings. Revenue enhancement legislation will take time and will be extremely unpopular with Alaskans. In the meantime, the state will necessarily be required to use up the unrestricted billions in the budget reserve accounts.
It is important for seniors to contact their legislators and let them know that if they plan to cut senior benefits 25 percent, then all state agencies and programs should likewise suffer a 25 percent cut. It is neither reasonable nor fair to pick a certain population’s benefits to be reduced while concurrently allowing other programs and populations to avoid cuts in benefits.
Leonard Kelley is the Older Persons Action Group board president.
