Fund's earnings tagged for gas line

Democrat's efforts to sideline funding derailed by GOP

Posted: Tuesday, March 08, 2005

Senate Democrats on Monday questioned the use of Alaska Permanent Fund earnings to pay for gas pipeline development work in a year of rich oil revenue, but were unable to remove the spending from a proposed supplemental budget appropriation.

The Senate tentatively passed the $244 million appropriation for this year's budget with the $7 million of permanent fund earnings spending intact.

The $7 million is part of the larger $28 million requested by four state agencies for preparatory work for a gas pipeline from the North Slope. The rest of the money, $21 million, would come from the state's general fund.

Another $125,000 would be paid from permanent fund earnings to the governor's office for Arctic Power's efforts to open the Arctic National Wildlife Refuge to oil and gas drilling, under the proposal.

Democrats attempted to move the $7 million to general fund spending, saying there is no need to tap into permanent fund earnings in a year when revenue from high oil prices is still coming in.

"I just cannot get over the fact that we would take money out of our savings account when we have money in our checking account," said Sen. Gretchen Guess, D-Anchorage.

Sen. Hollis French, D-Anchorage, said the use of permanent fund earnings has been creeping up over the years when that account should be saved for rainy days.

"These are predictable and ordinary government expenses that suddenly we are reaching into the permanent fund to provide the resources for," French said.

Senate Finance Co-Chairman Gary Wilken, R-Fairbanks, noted the permanent fund and permanent fund earnings were two different accounts and said gas pipeline development work was an appropriate use of the earnings.

He called it an investment of $7 million that may lower residents' dividend checks five years from now by 85 cents, give or take a quarter.

"I think the people I represent will endorse spending a dollar from a $1,000 check to help build a gas line," he said.

The state needs to be ready for a gas pipeline proposal if a proposal comes, Wilken said. State negotiators are in talks with two groups to build a pipeline that would ship North Slope gas reserves through Canada to the Midwest. No applications to build it have been made.

An amendment by French and six other Democrats to remove the permanent fund earnings spending failed to pass, with vote falling along party lines.



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