A new budget report says Alaska has more cash reserves than ever, nearly $10 billion. But given the state's near-total reliance on oil revenue and forecasts of slumping production, legislative leaders returning to work Tuesday said their mantra for this new session would be "conserve."
That's not to say there won't be new spending; the Senate's bipartisan leadership, for example, plans to push a package aimed at improving the availability and affordability of energy and put money into infrastructure.
They did not close the door on fattening, if slightly, state agency operating budgets whose growth Gov. Sean Parnell said he limited to about 2 percent.
Legislators want to look at both the merit-based scholarship plan Parnell is pushing - one he's proposed covering with earnings generated from $400 million in reserve set-aside funds - and a needs-based program. And they want to repay $400 million borrowed from the Constitutional Budget Reserve Fund, something the budget report released by the Legislative Finance Division on Tuesday says they're in a position to do.
Overall though, "we'd like to drive forward that concept of continuing to save," said Sen. Bert Stedman, the Republican Finance Committee co-chair.
The budget being crafted will be for the fiscal year beginning July 1. The analysis by the Legislative Finance committee found the state is in a better position than expected in part due to a "miscommunication" that caused revenue projections and financial statements to get out of sync beginning with the 2008 fiscal year. That resulted in an unexpected $1 billion in revenue for 2009, and its existence effectively blunts the decision to tap certain reserve funds, it said.
Senate President Gary Stevens said lawmakers agreed to limit their infrastructure wishlists last year, when Alaska's financial outlook was made murkier by volatile oil prices. They did so with the understanding that if the situation improved, they could expect a "little more generous" capital projects lists in the coming year, he said, and that expectation holds.
But lawmakers aren't being smug about the money in the bank as many of their colleagues in cash-strapped states face the prospects of severe cuts.
While Alaska is "probably more fiscally sound than (at) any time in its history," Sen. Lyman Hoffman said there are concerns about oil production levels - and the flow of revenue.
"These are difficult and different times," the Democratic Finance co-chair said.
Whether lawmakers try to prod production remains to be seen. House Republicans have questioned whether the state's current oil and gas production tax is actually hindering development and needs a more drastic overhaul than the one Parnell is proposing.
The governor has proposed what he calls refinements to the tax structure, and giving greater incentives to companies who do business in Alaska. Stevens seemed skeptical substantive changes could be made given the already heavy workload lawmakers face over the next three months.
All of this is playing out against the backdrop of an election year, with 50 of 60 legislative seats and the governor's office up for grabs.