JUNEAU, Alaska — Heading into the legislative session in January, two of the big issues were Gov. Bill Walker’s desire to expand Medicaid and the suddenly more urgent need to confront Alaska’s budget deficit amid a crash in oil prices.
It’s been said repeatedly this session that no one could have predicted the free-fall in oil prices that exacerbated Alaska’s deficit, leaving projected multibillion-dollar holes this year and next.
Alaska relies heavily on oil to fund state government, and oil prices are roughly half of what they were this time last year.
While it’s seen as virtually impossible for the state to cut its way out of this predicament, the focus in Juneau has been on cutting spending and reducing the size of state government before starting in earnest on discussions about additional revenues.
The state plans to use savings to help get by, but legislators and Walker want to stretch those reserves as long as possible.
One of the more contentious issues as House and Senate negotiators work to reach agreement on the state operating budget appears to be education funding.
The House agreed with Walker’s proposal to forward-fund education for 2017 at 90 percent, but the Senate did not forward fund for 2017 and proposed cutting $47.5 million in school funds for the next fiscal year, which starts July 1.
The would be on top of proposed cuts to the state education department and the possible elimination of one-time funds approved by lawmakers last session, of $52 million between next year and 2017, that Walker initially proposed.
The expectation has been that any authorized draw from the constitutional budget reserve would call for a three-quarter vote in both the House and Senate.
The majority caucuses on both sides require members to vote for the budget.
Fifteen of the Senate’s 20 members are in the majority, while the House would need to pick up help from the Democrats — who support Medicaid expansion and have opposed school funding cuts — to meet that threshold.
Walker, who took office Dec. 1, made expanding Medicaid a priority.
But that got off to a rocky start when he initially refused legislators’ calls to lay out his plan in bill form rather than have expansion-related provisions sprinkled throughout the operating budget.
He introduced an expansion bill last month that included proposals aimed at helping to contain and reduce costs in the existing Medicaid program. The current program is widely seen as unsustainable.
Supporters say expansion can provide savings for the state and leverage federal resources to help finance reform efforts.
But some legislators say they still have concerns about whether the system can handle thousands of new enrollees, and some want to enact reforms and see how they work before considering expansion.
Some question whether the federal government will honor its commitment to cover no less than 90 percent of health care costs for the newly eligible population.
The administration has said the state would not participate if the federal match fell below that threshold.
Walker’s appointees to boards and commissions, along with new Cabinet-level department heads are scheduled to be considered for confirmation by a joint session of the Legislature on Friday.
Those that have gotten particular attention include Rick Halford and Joe Paskvan, former legislators whom Walker appointed to the Alaska Gasline Development Corp. board after a shake-up that rankled Republican legislative leaders, and Attorney General Craig Richards, Walker’s former law partner.
Last session, the Legislature approved the state’s participation in a major liquefied natural gas project with oil and gas companies, TransCanada Corp. and the Alaska Gasline Development Corp.
But the project figured prominently into this session after a February op-ed in which Walker proposed an alternate project should the current project, known as Alaska LNG, falter.
The wording of the op-ed raised concerns that Walker was proposing a competing project and prompted House leaders to introduce a bill — which has passed the Legislature — that would restrict work on any alternate project until it is clearer whether Alaska LNG will enter its next phase.
While Walker has threatened a veto, he and House Speaker Mike Chenault have had conversations about whether there’s a way forward that gives both sides a level of comfort.
Walker has until Saturday to decide on a veto.
While the constitution allows for the Legislature to meet for up to 121 days in regular session, voters approved a 90-day session and a number of legislators would prefer to stick to that.
A special session to complete unfinished business could be called.
