Alaska editorial: Plaudits for efforts to save budget surplus
This editorial appeared in the Fairbanks Daily News-Miner:
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The Legislature is on the verge of making a good, thoughtful move regarding the state's $1.4 billion budget surplus from the current fiscal year. It's setting just under half of it aside, removing it from consideration in the fiscal 2007 budget that is working its way through the House and Senate.
The House made the decision almost final on Monday when it passed a supplemental spending bill for fiscal 2006. The bill must go back to the Senate, where it began, for its agreement on some House changes. Agreement is reportedly assured.
It's a move spawned by the size of Gov. Frank Murkowski's proposed budget for fiscal 2007, which, at $3.6 billion in general fund spending, is nearly $500 million more than what legislators approved last spring for the current fiscal year.
It proved too much for legislators to stomach.
The governor had proposed using up all of the surplus, when its amount stood at a lower estimate of $1.2 million, in the fiscal 2007 budget. He wants to use $400 million as payment toward a 20 percent ownership share of a natural gas pipeline from the North Slope, put $565 million toward the annual education budget for 2007, and spend $130 million on a variety of other projects.
Instead, the Legislature is choosing to deposit $300 million of the surplus in a public education fund from which it can be spent on schools in later years. An additional $300 million will be deposited with the Alaska Housing Finance Corp., although there is no expectation in the Legislature that the AHFC will actually spend the money.
In each case, the Legislature can withdraw the money with a simple majority vote when the time comes and if it deems that circumstances warrant it.
Some will argue that the Legislature's decision to put the money in the schools fund and the AHFC account isn't a true savings since lawmakers will have easy access to it. On that point they are correct, but it's not much different from how most of us save money. People put money in savings accounts or investment accounts all the time with the expectation that it will be there when needed for a difficult period or to make a wise purchase.
Does Alaska need to lock up all or part of the surplus for retirement? No. The state already has $34 billion in the Alaska Permanent Fund, so putting part of the surplus in that account wouldn't really enhance savings much beyond their already lofty status. Putting the money in the Constitutional Budget Reserve, or leaving it on the books so that it automatically gets swept in to the reserve at the end of the fiscal year, would be fine except that it would be subject to a three-quarters vote requirement of each chamber if the money were to someday be needed.
Taking a substantial chunk of the 2006 surplus off the table for fiscal 2007 is the Legislature's way of expressing its nervousness about the size of the governor's proposed budget and the uncertainty about the future of oil prices on which the state so depends. Given the alternatives, it appears that the Legislature is making the right choice.