My Turn: Building Alaska with a better capital budget

Posted: Wednesday, March 19, 2008

The Legislature is poised to pass a supplemental budget which contains $3.6 billion in savings. That sounds good, but $3.6 billion may be but a fraction of what should turn out to be a banner year for Alaska's savings accounts. Today Alaska is looking at record-breaking revenues due to record-breaking oil prices and at this writing, the predicted total surplus may be upwards of $7 billion. But as you know, the legislators who have the power over this surplus are the same legislators who control the operating and capital budgets. So we ask: "How much of the surplus will be spent, how much will be saved?" Many of us search for that answer, because as of today, the Legislature does not have a clear spending or savings plan in which the public can place its trust.

Alaska's public deserves better; certainly not a repeat of last year. Last year's general fund capital budget was large, very large. The budget was unsustainable, and we knew it. The governor's line-item veto of more than $230 million was the first step to slow the growth of our state's budget. Not only did the massive vetoes leave a blemish on the Legislature and the new administration, they showed the Alaska public that the Legislature was spending at an undisciplined rate.

I have witnessed the capital budget become less of a tool to build Alaska's infrastructure and more of a political document. The capital budget must not be a tool used by legislators to trade or bargain for influence on other legislation, it must not be a gun held to the head of one legislative body by the other, nor be the "last chance" to spend the people's money, fearing only the governor's veto pen.

The legislature needs to seize this opportunity for change. I respectfully suggest that the following three common-sense changes will help provide the framework to construct a responsible and sustainable capital budget this year.

1) Establish clear spending goals: Because there has been no clearly stated agreement on the level of spending, the sky has been the limit. Alaska's capital infrastructure needs must be met, but legislators must maintain a responsible funding level. To ensure disciplined capital spending, the legislative leadership and the governor must agree, in writing, to a capital spending limit. This agreement need not be public but it must be reached before the budget bill passes from the originating body to the other.

2) Alternate origin of legislation: Before 1992 the introduction of the capital budget bill alternated each year between the Senate and the House. I suggest the Legislature return to this tradition. An annual exchange of responsibilities, utilizing permanent capital budget staff, will provide a check and balance on the capital budget process, fostering trust and dialogue between the two bodies and the public.

3) Count all "Alaska" funds: As should it be, the public and the Legislature are particularly interested in capital projects funded by our state's general fund, the "people's money." The capital budget bill appropriates not only general fund dollars, but also dollars from other sources that can be spent on anything your Legislature decides. But these funds are grouped under a nebulous accounting category called "Other Funds," obscuring the source of the dollars and making them difficult to track. For example, dividends paid to the state this year by our public corporations, plus deposits into the Alaska Capital Income Account total more than $350 million, but these dollars avoid public scrutiny by being spent under the heading "Other Funds." Let's classify the state's current general fund dollars, and all the funds that spend like general fund dollars, as "Alaska Funds" and report them as such.

As we all agree, the capital budget must build Alaska's infrastructure, but the level of spending needs to be predictable and sustainable, not a boom or bust budget depending on the level of our surplus. The legislative process must be transparent and trusted by the public. The changes proposed above will help move us forward to accomplish that goal.

• Gary Wilken is a Republican Alaska senator of Fairbanks and Fort Wainwright.

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