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Lawmakers push back on ferry proposal, Medicaid expansion; looking at deeper cuts

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JUNEAU, Alaska — If people are uncomfortable with the impact of rescheduling ferry reservations, they will never be comfortable with the type of cuts needed to make the state budget work, a Senate Finance Committee member said during a hearing Friday.

In an interview, Sen. Peter Micciche, R-Soldotna, said there will be a level of discomfort and a need to pull back to essential services. Micciche chairs a Senate Finance subcommittee looking at the transportation department's budget. In prioritizing services in the agency's budget, "rescheduling a few tickets is going to be below what I see as essential services across the entire system," he said.

"We're going to evaluate the impacts. But the reality of it is, it seems like the administration is avoiding all discomfort, and that's something that none of us can afford to do," he said.

The state transportation department had proposed reductions in ferry service as part of an effort to cut costs during the upcoming fiscal year. But in budget amendments earlier this week, Walker proposed a one-time reallocation of $6.3 million from other parts of the department's budget to restore full service to the currently published ferry schedule. He said many families already have bought tickets for once-in-a-lifetime Alaska vacations, and he wanted to ensure that service was available to them.

During a committee discussion on budget amendments Friday, Micciche said that is probably not the direction he will want to go in his subcommittee's budget recommendation.

The ferry issue is just one that's been raised by lawmakers digging into Walker's budget plan. Others include proposed contingency funds for the administration to address the unintended consequences of budget cuts and Medicaid expansion.

There is skepticism among many legislators about the Medicaid expansion and the type of savings the state might see as a result of it. Walker has made Medicaid expansion a priority, and his budget attributes spending reductions in some programs to costs that would be covered under expansion. The budget includes proposed cost-control efforts for the current Medicaid program.

Both Senate Finance co-chair Pete Kelly, R-Fairbanks, and House Speaker Mike Chenault, R-Nikiski, said they would prefer to see reforms to Medicaid, a cost driver in the budget, before moving to expansion. "I think we have to have reforms of the magnitude that actually get us savings now before we ever consider expansion," Kelly said in an interview.

In discussing budget amendments Friday, Walker's budget director, Pat Pitney, told the Senate Finance Committee that Walker is considering a bill on Medicaid expansion after being asked to consider that by finance committee leaders. Aspects of expansion are currently sprinkled throughout the budget. A Walker spokeswoman had said earlier this week that he was not considering a separate bill.

Leaders in both the House and Senate have said they will probably cut deeper in crafting their versions of their budget than Walker proposed. The state is facing multibillion-dollar deficits this year and next, a situation exacerbated by the fall in oil prices. The state plans to use savings to help get by.

Chenault said he thinks his caucus will want to try to address the issue as much as possible because next year will be worse if things stay the same. He said he didn't have a target for total cuts.

Pitney said the administration feels that what it put forth represents a significant reduction but said legislators are the appropriators.

During the committee hearing, Pitney called the budget proposal a first step, "and as the pressure builds, the solutions will become more dramatic and the choices will become harder."

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