Gov. Sean Parnell is proposing a state operating budget that’s 4.5 percent higher than last year’s, and is leaving room in the capital budget for legislators to add their priority projects.
Much of the spending increase is driven by decisions made in the past that are outside his or current legislators’ control, Parnell told the Anchorage Chamber of Commerce while introducing the budget Thursday.
Alaska funds most of its budget with proceeds from oil, a non-renewable resource, and Parnell said despite the increases the state, was spending much less than it could in order to save for the future.
“Our spending must not spike up just because the state has surplus funds,” he said.
Parnell said his administration worked hard to hold down discretionary spending, and said much of the increase in the state’s operating budget is due to decisions made in the past, such as not adequately funding pensions and building the Goose Creek Correctional Center.
Parnell’s capital budget proposes spending $1.8 billion, but also leaves room for legislators to add $600 million in their own projects without exceeding current budget levels, he said.
Locally, the budget includes $20 million for the new state Library, Archives and Museum building, far short of the $90 million needed to complete the project.
Still, one member of Juneau’s legislative delegation is happy with the amount. Rep. Cathy Muñoz, R-Juneau, praised the support from the governor for what’s called the “SLAM” project.
“We were really pleased with the $20 million appropriation,” she said.
“It’s a sizable chunk,” she said. “As we go into the session we’ll work to maintain that funding and try to build more support for the project,” she said.
Parnell suggested later he only partially funded the project of statewide importance as a way of maintaining leverage with Juneau legislators.
Part of the Parnell’s rationale for his proposed budget was, he said, to “make sure that legislators stand up for their districts.”
Parnell joked that partial funding for the SLAM project was to “leave something for our Juneau legislators to do.”
Rep. Beth Kerttula, D-Juneau, didn’t like Parnell counting on Juneau legislators to advocate for an important state facility.
“Frankly, it wasn’t very funny,” she said. “That’s a statewide project, that’s not a Juneau project.”
One of the biggest factors driving this year’s budget increase is the need to set aside additional money to ensure future retirement obligations are met.
That’s made more difficult by state retirement trust funds’ unfunded liability. That’s the amount between what the state expects it will need to pay future benefits, and what the retirement trust funds are now worth.
This year the state was required to contribute an additional $470 million to the trust funds, an amount that is expected to cost $610 million next year, contributing more than $130 million to the increase.
Parnell called the $11 billion unfunded liability the state’s “elephant in the room” in any budget discussion.
Opening the new prison will cost $28 million, while employee labor costs will amount to $66 million and growing Medicaid costs, partially paid for by the federal government, will cost the state $45 million, he said.
While the governor’s budget is just the first step in a process that also includes the legislative process, and then the governor’s final say with his veto pen, inclusion in the initial budget is considered an important boost for local project.
Also in Parnell’s budget is $9.2 million for upgrades to the Douglas Alaska Department of Fish & Game office. That’s the first step in a $17-$21 million upgrade of that building over three years.
Another $2.5 million is proposed for repairs to the State Office Building’s parking garages. Parnell proposed both projects when he cancelled plans for a new Juneau office building, but the Department of Labor’s building issues have yet to be addressed.
Also included in the budget is $2.2 million for the Juneau Pioneer Home, $2 million for Amalga Harbor, $600,000 for the Marine Exchange of Alaska and tens of millions for several highway and ferry projects of local importance.
The spending specifically allocated to Juneau amounts to $32 million, according to the Parnell’s Office of Management and Budget.
• Contact reporter Pat Forgey at 523-2250 or at email@example.com.