Spending hike approved in operating budget

Posted: Wednesday, March 05, 2008

JUNEAU - Republican leaders in the House urged members to "hold the line on spending" as they passed a state operating budget on Monday that is almost 11 percent higher than last year.

The vote was 29-10 to approve a $10 billion spending plan for state agencies and K-12 education that would use $4.1 billion from the state's treasury.

The House plan trims about $73 million from Gov. Sarah Palin's proposed funding for state agencies, according to House Finance Committee co-Chairman Mike Chenault, R-Nikiski.

"We talk about what we want to save, but in order to get to the save part we have to control the spending part," said Chenault.

Some Democrats warned the Legislature would not be able to sustain such a budget in future years, however. Oil production is steadily falling and oil prices are volatile, warned Rep. Mike Doogan, D-Anchorage.

"Sure as I'm standing here those oil prices will fall and we'll be back here cutting the budget," said Doogan.

House debate centered on the need to put aside some of the surplus revenues that are flowing into state coffers from high oil prices and a hike in oil taxes. They are anticipated to total more than $4 billion in the current fiscal year.

Doogan unsuccessfully proposed an amendment to place $3.6 billion into the Constitutional Budget Reserve Fund. The state savings account is often used to cover budget deficits in lean years and less often as a constitutionally mandated depository of leftover revenues at year's end.

Chenault agreed the state needs to save much of the state's current bounty for the future, "I just think it's a little bit early in the process," he said.

A Senate proposal to put $3.6 billion into the same savings account is part of the supplemental budget to fund cost overruns in the current fiscal year. It's expected to pass the Senate Floor this week.

Only one other amendment was offered in the House during the relatively short debate. Lawmakers unanimously approved restoring $523,000 cut from Palin's budget for the newly formed Petroleum Systems Integrity Office.

The oversight office was created in response to pipeline corrosion in Prudhoe Bay that led to a production shutdown in 2006. The increase would double the staff by adding four new positions to perform investigations and develop a quality assurance program.

Though they did not propose amendments to the operating budget, some Democrats said lawmakers were missing an opportunity to adequately provide assistance to low income Alaskans in areas such as substance abuse treatment, early education and college tuition.

Rep. Mary Nelson, D-Bethel, said spending up front would save money down the road.

She said there are alcohol treatment programs in the state with pregnant women on their waiting lists.

And she expressed disappointed in the lack of progress funding preschool programs through the Department of Education and Early Development.

"The early development portion of their name comprises less than 1 percent of their overall budget, and that's really where we can spend now and save later," said Nelson.

Rep. Sharon Cissna, D-Anchorage, did propose several amendments to the Mental Health Trust Budget to add money for programs dealing with substance abuse, fetal alcohol disorder and severe mental illness.

Those amendments failed.

Palin's budget director Karen Rehfeld said the administration is hoping to see some money restored to the budget to cover low income tuition grants, added prison beds, inmate health costs, suicide prevention and substance abuse programs.

"We still have the Senate side and we'll keep working on it," said Rehfeld.

The House vote on the operating and mental health trust budgets arrived a month earlier than usual as lawmakers push to finish their work in a voter-mandated 90 day period.

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