Federal Budget Bill Will Slash Jobs in Energy, Construction, Health, and Public Sector to Finance Tax Cuts for Billionaires

As the U.S. Senate passes the federal budget bill, Alaska House Labor and Commerce Committee Co-Chairs are raising the alarm about the devastating economic impacts of the bill on Alaska, which will not only affect the private sector but also trigger ripple effects that severely impact the state budget.

Here’s how the federal budget reconciliation bill will devastate Alaska’s economy:

• Shutting Down Energy Development: The federal budget reconciliation bill eliminates Investment and Production Tax Credits (ITC/PTC) for wind and solar projects. These credits are essential for reducing rural communities’ exposure to imported diesel and Railbelt communities’ reliance on imported LNG, making their repeal economically harmful to Alaska.
• Canceling Medicaid Coverage Through Red Tape: One of the most destructive healthcare provisions of the federal budget bill is a requirement for states to confirm Medicaid recipients are working. Based on past experience, this is massively expensive and unworkable. This intentionally unworkable burden on the state will contribute to tens of thousands of Alaskans losing health coverage, which in turn will create uncompensated care costs and red ink for frontline healthcare providers, putting additional hospitals at risk of closure. The Alaska Hospital and Health Care Association estimates that nearly 40,000 Alaskans will lose coverage.
• Shifting Costs for Medicaid Expansion from Federal to State Budget: Opponents of Medicaid are attempting a back-door repeal of Medicaid Expansion by cutting the federal match rate nearly in half. This massive cost shift will add at least tens of millions of dollars to Alaska’s budget, necessitating either drastic cuts to public services or cuts to the Permanent Fund Dividend (PFD).
• Massive Cost Increases in Private Health Insurance: The federal budget bill terminates Enhanced Premium Tax Credits, which make health insurance affordable for 23,000 Alaskans in the private sector, primarily those who own or work for small businesses. This will increase some Alaskans’ premiums by thousands of dollars per month. Making health insurance unaffordable for small businesses will increase bankruptcies from medical bills, exacerbate the labor shortage, and increase premiums for the dwindling number of Alaskans who still have health insurance.
• Increased Health Insurance Premiums from Uncompensated Care: Cutting Alaskans off Medicaid, slashing federal support for Medicaid Expansion, and canceling private health insurance through massive premium increases will have the cumulative impact of significantly increasing uncompensated care, which hospitals provide but are not paid for. In turn, this forces increases in premiums for the shrinking number of insured Alaskans, representing a cost increase for resource development companies, contractors, school districts, local governments, and state employees. Increases in uncompensated care will put hospitals, especially those in smaller communities, at serious risk of shutting down as a loss of Medicaid dollars makes it impossible for them to meet payroll.
• More Addiction, Homelessness, and Crime: Slashing Medicaid coverage will reduce the number of Alaskans who can access behavioral and mental health care, likely leading to increased rates of addiction, suicide, homelessness, crime, and other symptoms of untreated addiction and behavioral health issues.

“The federal budget bill is an unmitigated disaster for Alaska’s economy, with sweeping negative impacts on health care providers, employers who offer health coverage, and Alaskans who rely on Medicaid to meet their basic health needs,” said Labor and Commerce Co-Chair Carolyn Hall. “All Alaskans should be concerned because the bill will create a federally-induced fiscal crisis in the state budget, which is already significantly challenged with unstable revenue sources.”

“After generations of Alaskans investing in domestic energy generation, this federal assault on domestic energy production is a betrayal of Alaskans and will lead to significantly higher utility bills for Alaskans,” said Labor and Commerce Co-Chair Zack Fields.

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