Sen. Ted Stevens told the Alaska Legislature on Wednesday that the state stands to receive less federal funding in the future and should rely more on its own money generators.
The Alaska Permanent Fund is viewed in Washington as a source for supporting state construction of roads, bridges and other capital projects, said Stevens, R-Alaska.
"Many see our projected $1.4 billion annual surplus, plus $34 billion in the permanent fund, and with the increasing price of electricity, gasoline and heating oil, and ask: Why send federal money to Alaska when they're not willing to spend their own funds?" he said.
Congress is preoccupied with an $8 trillion debt and providing U.S. troops with the equipment and resources needed to fight in the Middle East, Stevens said.
The state should "inflation-proof" the permanent fund and then direct money toward projects that would lead to more revenue, Stevens suggested.
"We've got a lot of problems that haven't been met. And we've got good income now. And (at) this time we ought to do things to enhance our ability to get future income," he said.
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Some of the examples he gave were providing incentives for oil producers to explore leases for more oil and invest in coal gasification projects, and developing a natural gas pipeline to deliver the resources to markets in the Midwest.
House Minority Leader and gubernatorial candidate Ethan Berkowitz, D-Anchorage, said the state should continue socking money into the permanent fund because it creates a renewable resource out of a nonrenewable resource.
"We need to build the permanent fund as big as we can possibly get it," he said. "That way we are saving money so future generations can enjoy the resource wealth that we're extracting today."
As Washington enters its 25th year of the debate on oil drilling in the Arctic National Wildlife Refuge, oil companies may lose interest in fighting the issue if this Congress cannot pass legislation to open the area, Stevens said.
"There's no lesson out of a third kick of a mule," Stevens said. "They're not going to continue to put up money when the problem is the partisan political problem cannot be solved."
This year could be different because petroleum prices continue to be high and a sentiment exists to rely more on domestic supply, Stevens said. But backers of ANWR drilling may run into similar problems if there are not enough supporters in the House to pass a budget reconciliation with ANWR provisions, he added.
Last year, designations known as "earmarks" were removed by Congress for $450 million set aside for the controversial Ketchikan and Anchorage bridges after they were criticized nationally as "bridges to nowhere."
From now on, earmarks will require state-matching funds, Stevens said.
"The culture in Washington has seemed to have turned against Sen. Ted Stevens, on earmarks and other things. He told us that in so many words," said Alaska Senate Minority Leader Johnny Ellis, D-Anchorage. "So that was sort of the cold water in our faces."
Ellis fears the Senate majority will set a trend of not using state money for programs that are losing federal funding. Republicans maintain they are scrutinizing programs to see if they will be sustainable in the future.