Alaskans react warily to federal budget cutting

Posted: Tuesday, February 22, 2011

Cutting the nation’s growing budget deficits may have hit Alaska’s budget, and may increase the state’s own deficit, legislative leaders say.

The Republican-led U.S. House of Representatives is hoping to cut $60 billion from the federal budget, an amount that could result in $50 million cuts in Alaska, said Rep. Mike Chenault, R-Nikiski, speaker of the Alaska House of Representatives.

“We need to be very aware that if the House plans go through, we will be receiving considerably less money,” he said.

One popular program already slated for cuts by President Barack Obama is Low-Income Home Energy Assistance Program, known as LiHeap, that helps the poor afford heating fuel.

Obama has proposed cutting the $5.1 billion program by $2.5 billion. In Alaska, the feds provide about $12 million of the state program’s $17 million budget.

Chenault said if some or all of that is lost, the state may “backfill,” or make up the difference with state funds.

Rep. Neal Foster, D-Nome, also said the state would have to take serious look at doing that.

“This is a major program for rural Alaska when you are paying $8 a gallon for fuel,” he said. Foster’s northwest Alaska district is one of the nation’s coldest and most remote.

Under state law there might be an obligation to replace lost federal funding, said Karen Rehfeld, director of Gov. Sean Parnell’s Office of Management and Budget.

“In the absence (of federal funding) or with a reduction, we would be asked to look at increasing state general funds to offset some of that,” she told the Senate Finance Committee.

Federal budget woes may also make it less likely the Congress will continue pick up a larger share of the cost of Medicaid, as it has recently as part of Obama’s stimulus package.

If the extra Medicaid funding isn’t approved, it will cost the state an extra $123 million this year, Rehfeld said.

That’s with a budget proposed by Parnell that already takes in less than it spends.

If the extra Medicaid funding doesn’t come through, the state’s budget will be even further “underwater,” said Sen. Bert Stedman, R-Sitka, co-chairman of the Senate Finance Committee.

Rehfeld said the state will issue an interim revenue forecast before the end of the legislative session, and in the past that has resulted in higher projected revenue.

• Contact reporter Pat Forgey at 586-4816 or

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