Senate majority wants more capital spending

Posted: Wednesday, February 10, 2010

While higher-than-expected oil prices have fattened state coffers, Alaska Gov. Sean Parnell said Tuesday he's imposing spending restraint in the Capitol. It's a concept lawmakers say they buy into, but there's debate over how the pennies should fall.

Michael Penn / Juneau Empire
Michael Penn / Juneau Empire

Parnell wants to limit general fund capital spending at $400 million, in addition to projects, such as a new crime lab, moving separately through the Legislature. Members of the Senate's bipartisan working coalition, however, see that plan as leaving lawmakers with about $100 million that they would have to share for projects back home - far less than the $400 million to $500 million that Senate President Gary Stevens believes many legislators would prefer.

Stevens, R-Kodiak, said Tuesday he understands where Parnell intends to go on capital spending. "It's not exactly our intention," he said of fellow lawmakers.

Sen. Dennis Egan, D-Juneau, is a member of the governing coalition. He agreed that after last year's tight budgets, more could be spent this year.

"I think we can spend more than the governor's requesting," he said. "It was very bad last year; very few projects got funded."

Whether that view translates to increased capital spending is unclear. It might also mean a dicing of Parnell's proposed spending to make room for legislators' projects while staying within the governor's $400 million target range.

While lawmakers such as Senate Majority Leader Johnny Ellis, D-Anchorage, want to see a "healthy" capital budget, in part to help create jobs amid concerns of a softening economy, they say the overriding issue is what the state spends overall. And those details are still being worked out.

Lawmakers last year held back on capital requests because of state budget uncertainties, Stevens said. A recent revised revenue forecast, cited by the Parnell administration, projects a surplus of more than $2.2 billion for the fiscal year ending June 30, largely due to higher-than-expected oil prices.

Working group members agree with Parnell that $1.5 billion of that is essentially off limits, expected to be reserved for education spending and repaying a debt to a state reserve fund. The rest is up for grabs, and decisions will need to be made - during this political year, when most legislative seats are up - on what gets spent and what gets saved.

Egan said he was pleased that Parnell included at least one important local project - the Johnson Youth Center - in his budget, but is seeking ferry construction and possibly archives building money as well.

Parnell, who is seeking to win the office he inherited when Sarah Palin resigned last summer, said he wants fiscal restraint.

"In times of surplus, you don't just throw it all away," he said. "You save some back for the lean years, as well."

Lawmakers in both houses have preached the same. But some have questioned whether the agency operating the budgets that Parnell has proposed are too limited; in December, he proposed about 2 percent growth, less than he said agencies wanted. And then there are the infrastructure projects.

Sen. Bert Stedman, a Finance Committee co-chairman, said that while the rosier budget projection gives lawmakers more money to work with, it would be "irresponsible" to spend it all.

"I can assure you, that won't happen," he said.

Egan praised Parnell's open relationship with the Legislature. He has had informal meetings with the House and Senate majorities in the last few days.

"It is good that the governor is dealing with us and has laid his cards on the table," Egan said.

• Juneau Empire reporter Pat Forgey contributed to this story. Contact him at

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