A closer look at the 2011 state budget

Posted: Thursday, January 20, 2011

Alaska’s $12 billion state budget got its first examination on the second day of the legislative session with a presentation to the House Finance committee.

R. Keith Hatchell / R. Keith Hatchell
R. Keith Hatchell / R. Keith Hatchell

Among the issues expected to be under consideration this year: Why it’s as big as it is, and where it may become even bigger.

Much of what Karen Rehfeld, director of the governor’s Office of Management and Budget, told the Legislature was good news. That’s especially true compared to other states, she said.

“The bottom line is, we have a balanced budget, substantial cash reserves and an excellent bond rating,” she said.

The focus of Gov. Sean Parnell’s fiscal year 2012 budget will be to position Alaska’s economy for growth and families for opportunity, she said.

One way to do that, she said, was to make strategic investments in money spent to foster resource development.

This year that includes $8 million for a road to Umiat, to provide land access to the Gubik gas and oil fields. Other resource efforts include road access to the Ambler mining district and continued study of road options to western Alaska.

There’s also $173 million to develop natural gas in Alaska, with the largest portion, $160 million, being this year’s portion of the half-billion state subsidy for developing a natural gas pipeline.

The state has already budgeted $185 million, and will include the remainder in the 2013 budget, Rehfeld said.

The state is also including money for tax credits designed to spur oil drilling. Those credits were authorized in previous budgets.

“The good news is we are seeing a lot of increase in oil exploration,” Rehfeld said.

Other goals are to use the state budget to improve people’s lives, including improving education and public safety.

Specifically, that means $8 million for the first year’s new scholarship plan for this year’s high school seniors. Eventually, that’s expected to cost about $20 million a year, she said.

To improve public safety, she said, Parnell wants to add 15 new village public safety officer positions, and three new state troopers. The number of VPSO’s has already been increased from 47 to 86, she said.

“The goal is to have a trooper, police officer or VPSO in every community that wants a law enforcement presence,” she said.

There’s also $3.2 million to combat domestic violence and sexual assault, and new efforts to investigate sex crimes.

Rehfeld also presented the committee with new way to look at the state budget, not by department, but grouping the budget by type of spending.

More than half the state budget, she said, was for non-discretionary items, where spending is driven by formulas in existing laws. That included things ranging from Medicaid spending to the permanent fund dividend.

About one-fifth of the budget goes for salaries, while another fifth goes for purchased services. Both of those largely feed back into the state’s economy, she said.

The biggest share of the budget goes for grants, direct payments to individuals, and capital project funding, she said, benefiting communities, individuals and organizations.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.

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