My Turn: The governor's budget includes wise investments

Posted: Sunday, February 12, 2006

T o read the Feb. 10 editorial, reprinted from the Fairbanks Daily News-Miner, a person would get the incorrect impression that Gov. Frank H. Murkowski plans to blow $1.2 billion in unanticipated revenue this year. Nothing could be further from the truth - the governor's proposal wisely invests this revenue.

We agree that this unanticipated revenue should be put to use in a way that benefits Alaska in the future. It is good to save - but as Gov. Wally Hickel says, "you can't save yourself rich." Perhaps it is time to recognize not only the need to save for a rainy day, but the value in investing in Alaska's future.

The governor's proposal is to set aside 50 percent of these revenues ($565 million) to help pay the cost of education next fiscal year - a cost we know we are going to meet. I equate this to a family that inherits $25,000. They could have one really great vacation, come home, and then have to pay their bills, or use the inheritance to pay down their home mortgage, an obligation they know they are going to meet. While some may characterize this as "spending," others would say it's a prudent way to meet obligations.

The governor also proposes to set aside $400 million (33 percent) for investment in the gas pipeline. He is committed to ensuring that Alaskans receive maximum benefit from the gas pipeline - in state revenue, in jobs and in access to gas. By owning a share of the gas pipeline, the state will maximize its revenue and have a seat at the table we never had with the oil pipeline.

The only more "traditional" type of spending we propose is $130 million for road improvements in communities around the state and to address deferred maintenance needs at state facilities.

The editorial also raises concern over the size of the administration's supplemental requests. Our fiscal plan anticipated $110 million in supplementals, and unfortunately, we missed that mark. I know the easiest thing to do is criticize the bottom line, but before you do, look at the reasons for these requests, which include:

• $75 million for the Medicaid program, which includes $44 million for the FairShare program that we inherited from the last administration. The federal government rejected their scheme and the court affirmed that decision last fall. Now this administration has to pay the bill - $45 million this year and another $45 million next year. Increased health costs and a growing number of eligible clients are again increasing the program's budget. If the Legislature doesn't want to fund the program's costs, it needs to pass a law to change benefits and/or eligibility;

• $8.5 million for the Department of Corrections to pay for more prisoners. More troopers, prosecutors and tougher laws mean more prisoners that must be incarcerated and supervised 24 hours a day;

• $30 million to assist in paying skyrocketing energy costs. This includes $14.8 million for the Alaska Marine Highway System's increased fuel costs and $8.8 million to help low income households with their utility bills and $8 million for state agencies, of which $2.9 million is for the university;

• $5.4 million for gas pipeline-related work, which will add billions to the state treasury upon completion of the gas pipeline;

• $4.1 million to pay for past disasters. It has long been the Legislature's practice to pay for disasters after they happen and the bills come in - thus setting the program up to require a supplemental; and

• $3.3 million to pay court-ordered judgments and claims, other settlements and labor contracts.

During the first two years of this administration we cut $150 million and 473 positions from the budget. We don't take our current windfall for granted, nor do we make spending decisions based on how much there is to spend. Our record shows that we can - and have - made the tough decisions and have put the state's money where our mouth is. I trust you'll expect the same from others.

• Cheryl Frasca is the director of the state Office of Management and Budget.

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