Rebuilding Savings Is Stedman’s Goal

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Category: Local News

Created on Tuesday, 08 February 2022 01:31

By SHANNON HAUGLAND
Sentinel Staff Writer

Alaska’s financial picture is improving with the rebound of oil prices and federal pandemic relief, and Sitka’s senator says the state’s next move could ensure longer-term gains.

“It could greatly improve if we replenish our savings,”  said Bert Stedman, Sitka’s senator for almost 20 years. “We pulled $660 million out of our savings (in the current year) and depleted our savings to a minimum. We need to replenish it. This governor proposed spending and not replenishing, leaving the state in a precarious position.”

Bert Stedman. (Sentinel file Photo)

Stedman is the co-chair of the Senate Finance Committee in charge of the operating budget. His district includes Sitka, Ketchikan and smaller communities in Southeast, and with this year’s redistricting now includes Yakutat.

Gov. Mike Dunleavy released his fiscal year 2022-23 budget in December, and Stedman said he and the finance committee staff have been busy reviewing what’s in – and not in – the governor’s proposed spending plan.

Contributing to a seemingly rosier picture are federal pandemic relief funds, and oil prices rising back to above $90 per barrel – the highest since 2014. Stedman said he’s not assuming the price will stay at that level as he looks beyond fiscal year 2023.

“We’re working on figuring out the structural deficit we’ll be facing once the federal money goes away,“ Stedman said.

He puts the rough estimate of the structural budget deficit at a half-billion dollars.

“We have to have a balanced budget,” he said. “For the last several year the balanced budget has been from savings and COVID money and our savings are pretty much depleted.”

Besides putting funds into reserves, he’s also hoping the Legislature takes a look at the backlog of deferred maintenance.

Stedman gave a quick recap of what has happened in the Legislature since it went back into session Jan. 18 and what he sees going forward, particularly on how much to replenish the state’s savings account.

For Stedman’s part, his outlook is for a “healthy budget in fiscal year 2023,” and he hopes that unanticipated revenue from the past year can go back into statutory and constitutional budget reserves instead of being spent.

“We depleted the savings to get to a $1,100 Permanent Fund Dividend,” Stedman said. That amount was supported by Stedman.

Although the higher than expected oil prices and federal funds are helping close the budget gap, Stedman said replenishing the savings instead of spending it will give the state something to fall back on when oil prices drop again, and federal pandemic relief runs out.

One of Stedman’s concerns is to add back funding in the current year and next year to make up for budget reductions in previous years.

He is keeping his eye on other things as well as the budget process unfolds. One is the reimbursement of school bond debt, which has an effect on city finances and the sunset date of the seasonal sales tax. The governor has already included it in his proposed budget, and Stedman wants to make sure it stays there.

“It’s also time we look at BSA – the base student allocation. It’s been flat for several years,” he said. The BSA is the main funding mechanism for public schools.

Stedman also is hoping to see the availability of vocational-technical education increase. And he’s following the development of a new reading program to help kids learn to read, and boost test scores in that area around the state.

“We need to put things in place to expand opportunities for young Alaskans,” he said.