Pay hike requires more cuts

House approves raises for state workers, but money must come from across-the-board reductions

Posted: Monday, May 01, 2000

A bill that passed the House on Sunday would pay for state workers' new labor contracts. But the money comes from making an across-the-board cut throughout most of state government.

House Bill 52, appropriating money for the contracts, passed the House late Sunday evening on a 30-10 vote.

An amendment to pay for the deals by making a 1.125 percent across-the-board cut to state government passed by a much narrower vote, 21-19.

Rep. Eldon Mulder, an Anchorage Republican, proposed the cut. The proposal, he said, would allow about $19 million in general fund money to be spent on the contracts without busting the legislative majority's goal to cut $30 million in general fund spending this year.

The University of Alaska, the court system and facilities that have 24-hour-a-day operations, such as prisons and Pioneers' Homes, would be spared from the cut.

``I think it is the fiscally responsible way of trying to fund these contracts,'' said Mulder, who is co-chairman of the House Finance Committee.

Other representatives said it's a terrible way. The across-the-board cut could hurt state services from road plowing to social workers responding to reports of harmed children, minority Democrats said.

Although Mulder said schools would not be affected, Rep. Eric Croft, an Anchorage Democrat, said the bill does not exempt the education funding program and could mean an $8 million cut to schools across the state.

``I think there's a lot of unintended consequences in this approach,'' said Rep. John Davies, a Fairbanks Democrat.

The reduction would be an unallocated cut, meaning it would be up to Gov. Tony Knowles' administration to figure out where to take the cut in each department.

There is speculation, however, that the unallocated reduction may not be needed.

Rep. Gail Phillips, a Homer Republican who sits on the House Finance Committee, said she believes the administration has other funding sources that can pay for the contracts, but hasn't put them on the table yet for fear the finance committees will spend them on something else.

Annalee McConnell, director of the Office of Management and Budget, said the administration doesn't have $19 million available to fund the contracts.

However, she said, ``We have indicated that if they are serious about funding the contracts, approving the contracts, we will discuss with them other funding sources.''

Some of the potential funding sources the administration had identified earlier for labor contracts were already spent by finance committees, she added, sometimes with the agreement of the administration.

The bill's fate in the Senate is uncertain.

Sen. John Torgerson, a Kasilof Republican who is co-chairman of the Senate Finance Committee, said he had ``no idea'' what kind of reception the bill would get, adding he hadn't read it as of early Monday morning.

Sen. Gary Wilken, a Fairbanks Republican, said he believes there is support in the Senate for funding the labor contracts if a way can be found to do so without breaking the Republican majority's goal of cutting $30 million in general fund spending.

Unallocated cuts are not the best way to get there, he said. ``Those kind of things are always in the toolbox if you need to use them. I'll wait and see and hope there's a more creative way to do it.''

Wilken also wondered if an as-yet-unidentified pot of money might turn up. In 1996, he said, a similar phenomenon happened near the end of the session.

``One day we got together in a meeting and suddenly there was $16 million that had been found in an overpayment in a municipal employees' retirement account,'' he said. ``I'll never forget that. All of a sudden there was just $16 million.''

Most senators are not interested in dealing with labor contracts in a special session, nor in having a state workers' strike, Wilken said.

``I don't believe the majority of the majority wants to blow this thing up, but we've got to do it with fiscal constraint and all the things we hold as a priority.''

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