State lawmakers, governor debate how to spend $1 billion

Bethel legislator pushes for replacement of several rural schools

Posted: Monday, February 15, 2010

State legislators are in negotiations with Gov. Sean Parnell as to how $1 billion in surplus state revenues will be spent.

In total, the state will have a $2.2 billion surplus in the current 2010 budget year and an additional estimated surplus of about $400 million next year.

Parnell has recommended that $1.1 billion of this be deposited into a special education account in the treasury to advance funds to school districts around the state.

Parnell wants another $400 million be deposited in the constitutional budget reserve, a separate state savings account, to repay withdrawals from the CBR fund in past years.

State legislators widely support both deposits, but it still leaves about $1.1 billion on the table.

Senate Finance co-chair Sen. Bert Stedman, R-Sitka, said his committee will develop a plan to save part of this before making plans to spend the rest. Sen. Lyman Hoffman, D-Bethel, who co-chairs the finance committee with Stedman, agrees with that course.

The Legislature has a good track record in saving surplus funds recent years, Hoffman said, and the fact that the state is now in a healthy financial position can be credited to this. Alaska has about $10 billion saved in several reserve accounts, not including the permanent fund.

Still, money on the table means the budget will grow this year, Hoffman and other legislators say. The governor has submitted what he says is a "maintenance" budget that allows minimum growth for state agency spending and a capital budget that has only two major projects, a new science building at the University of Alaska Fairbanks and a new crime laboratory in Anchorage.

Hoffman is pushing for long-needed replacement of several rural schools and Parnell has agreed to discuss this, conceding that the capital budget will grow.

The governor will visit several rural villages in Western Alaska where new schools are proposed. He will be accompanied by Hoffman and other rural lawmakers.

There may be additions to the capital budget for buildings in the Anchorage area, too. Legislators from Anchorage are pushing for a new sports complex at University of Alaska Anchorage.

A point of tension developing is how much Parnell will allow in capital budget additions for legislators' district priorities. In a Feb. 9 briefing, Senate President Gary Stevens said the governor had told legislative leaders in meetings Feb. 8 and Feb. 9 that he would consider allowing $100 million in the capital budget for community projects.

Legislators would like substantially more than that for community grants, Stevens said. Due to revenue constraints last year, legislators did not make any community appropriations with the understanding that they could do so this year if the money is available, he said.

Senate Majority Leader Johnny Ellis, D-Anchorage, agreed with Stevens. The approximate size of the governor's proposed state general fund portion of the capital budget is $300 million and he appears willing to add $100 million for community projects.

"The ratio of three-fourths of the money going to agencies and one-fourth to communities is one that we don't like," Ellis said.

"The governor is being a fiscal conservative," Stevens said, "but we just want our share (of the capital budget for communities) to be higher."

These are typically small appropriations for schools and nonprofit organizations, such as sports and recreation groups, in which constituent groups work with legislators to insert into the budget.

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