The first comprehensive savings plan for the state's multibillion-dollar glut of oil money rolled out of the Senate Finance Committee on Monday as part of a proposed $4.3 billion supplemental budget.
The plan also contains $300 million for energy rebates to help Alaskans weatherize their homes and $180 million in municipal revenue sharing for the next three years. It also restores about half of the funding for capital projects that were vetoed by Gov. Sarah Palin last summer.
Palin introduced the supplemental budget to cover unanticipated spending in the current fiscal year, but the Senate version is as much a savings plan as a spending plan.
Lawmakers have been debating how best to deal with at least $4 billion in surplus revenues expected from high oil prices and a recent boost in oil taxes this year.
Palin proposed sinking $2.5 billion into a fund to pay for education in future years but many lawmakers agreed the state savings account, the $3.2 billion Constitutional Budget Reserve Fund, was the best place for the cash overflow.
The fund is somewhat protected by a requirement that two-thirds of lawmakers have to vote to spend money from it.
Even so, they have borrowed more than $5 billion dollars from the fund in the last two decades to cover budget deficits. Despite a constitutional requirement, the money was never repaid.
The Senate proposal would sink at least $2.6 billion into the fund, though the final amount could be much higher since the estimate is based on oil prices at $72 a barrel, while current prices are hovering at $100 a barrel.
Lawmakers also plan to put another $1 billion into the Statutory Budget Reserve, which only requires a majority vote of lawmakers to spend.
Senate Finance co-chairman Bert Stedman, R-Sitka, said the idea is to put away the bulk of the money to gather interest over the long term and use the smaller fund as "an ongoing cash flow balance account."
"So we are trying to get our savings to earn more money for us," Stedman said.
The bill also addresses the impact of high oil prices on Alaskans struggling to pay their home fuel bills.
Instead of a cash payout as some have proposed, the Senate plan would expand the existing home energy efficiency and weatherization programs in the Alaska Housing and Finance Corporation.
The proposal would add $200 million for households earning $30,000 a year or less to pay for improvements such as airsealing, insulating and improved heater efficiencies.
About 17,400 households in Alaska would be eligible for the weatherization work. Another $100 million would go into a home energy rating rebate program which would offer all households rebates of between $2,500 to $5,000 on work done to make homes more energy efficient.
"It's a longer term savings than paying someone's bill that they will continue to have next year and the year after," said Finance co-Chairman Lyman Hoffman, D-Bethel.
House Finance Committee co-Chairman Kevin Meyer, R-Anchorage, said the program has merit, though lawmakers also may consider a state match of about $10 million to the federal Low Income Heating Energy Assistance Program.
Rep. Mary Nelson, D-Bethel, said she thought the Senate's energy efficiency proposal was a wonderful idea that would provide an additional economic boost for local retailers and construction workers.
But she wants to see a broad-based distribution of the state's wealth as well.
"I hope this is not the only thing the Legislature does, but this is a piece in a much larger package," Nelson said.
The supplemental budget also would restore $51.4 million in capital projects that were vetoed by Palin last summer.
Hoffman said he discussed the projects with local community leaders.
"There was a lot of support for these projects and hopefully they will have some influence over the governor. These are projects that have gone through the public process at the local level and have local support," Hoffman said.
Palin's budget director Karen Rehfeld described lawmakers' decision to add the vetoed projects as unusual and unfortunate.
"We had hoped that we could work together on projects in the 2009 capital budget," said Rehfeld.
The bill also includes:
$60 million a year for the next three years to a municipal revenue sharing program. A bill to set up the program moved out of the House Finance Committee on Monday.
$18 million to fund a benefits program for seniors that lawmakers passed in special session last summer.
$125 million in oil and gas tax credits to oil companies on the North Slope.
$2.3 million for caseload growth at the Office of Public Advocacy, which provides legal help for children, senior citizens and other vulnerable Alaskans.
Rehfeld said she is pleased to see progress being made on areas that were in contention last year like municipal revenue sharing and education funding.
"The difficult thing for us is we don't know the overall plan here and where things are going. There's just a lot of work yet to be done," Rehfeld said.
The Senate plans have the supplemental budget bill on the floor today. Meanwhile the state operating budget was introduced on the House floor Monday with a final vote expected Wednesday.
Committee work on the capital budget is expected to begin soon in the Senate Finance Committee.
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