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Gov. Sean Parnell seeks spending levels comparable to current year; faces challenges ahead

Posted: October 31, 2011 - 12:03am

JUNEAU — Alaska Gov. Sean Parnell said he expects next year’s budget to be in line with the state’s current spending plans.

Parnell told The Associated Press he believes in limited government and fiscal restraint, and doesn’t see “good times, from a revenue standpoint, as a license to ramp up spending.

“I much prefer the stability of a healthy capital budget, and working to maintain a reasonable operating budget, meeting the constitutional priorities that we have,” he said.

Parnell, who has until Dec. 15 to unveil a budget plan for fiscal year 2013, said he wasn’t prepared to provide a dollar figure for what he’d consider to be an acceptable level of spending.

He said he intends to propose a balanced budget, one that also leaves room for lawmakers to add to.

He said he’d prefer a more consistent level of capital spending “that we can afford right now to put jobs on the street and build infrastructure that fuels more economic activity.”

The operating and capital budgets for the current spending year total $11.4 billion, more than half of which, $6.9 billion, is state general fund dollars. Parnell vetoed a record of more than $400 million.

While Alaska is in much better financial shape than many other states, it does face big challenges.

The state relies heavily on oil revenues to run, and while high oil prices have helped line the state’s already-flush coffers and reserves, oil production is declining.

Parnell faces some hard decisions in succeeding, as he hopes, in holding down operating costs.

Besides entitlement programs, like Medicaid and education, which are expected to need additional state support, the state also faces $11 billion in unfunded pension liabilities — growing payments to meet its obligations — and the prospect of hiring more than 200 workers to run a new prison.

The Republican governor said he’s “scouring” the state to see if there are positions that can be cut or supplanted to offset that kind of increase in jobs. He anticipates “easily” about $200 million in extra costs — accounting for all those various needs — but said he’s working hard to hold the line on the operating budget.

He said he and his budget office are in the process of paring back state agency requests.

An overall spending plan commensurate with the current one would show the state is “exercising restraint but also making healthy investments,” he said.

He plans to put more money toward building roads to resource development areas and continue the program that has put more than $100 million toward eating into a backlog of deferred maintenance projects for each of the past two years.

Parnell also wants to ensure there’s federal match money to leverage such things as highway dollars, which will help further develop infrastructure in this still-young state.

Parnell, a former lawmaker who will be proposing his third budget as governor, said he thinks he’s established a reputation as someone willing to work with and listen to legislators and not play favorites when it comes to projects.

A budget standoff between the Senate and House earlier this year sent the Legislature into special session.

The Senate Finance Committee put language into the capital budget that lawmakers said was intended to guard energy projects from being vetoed. There was concern among some that Parnell would be vindictive with vetoes over the Senate’s failure to act on his plan to cut oil production taxes.

Parnell said he is committed to working with lawmakers, and is looking forward. “I will continue to try to be a wise steward with the public’s money and I think legislators are joining me in that,” he said.

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