Senate passes state operating budget

Posted: Wednesday, March 31, 2010

With Senate passage Tuesday of an $8.1 billion state operating budget, attention is shifting to what could be a more controversial spending plan - that for capital projects.

Not that the operating budget is a done deal or without controversy of its own.

The version headed back to the House lifts the conditions representatives placed on funding Gov. Sean Parnell requested for legal, analytical and other work related to advancing a proposed major natural gas pipeline project; it also includes the $6.5 million he wanted - and the House withheld - for in-state gas development work.

Rep. Mike Hawker, a finance committee co-chair, and other House members aren't convinced Parnell's administration has made a convincing case for the funding. Sen. LymanHoffman, a Senate Finance co-chair, said he understands the concerns and wants to have further talks with Parnell's office on funding levels. The issue appears destined for conference committee.

Meanwhile, Sen. Bert Stedman, Hoffman's co-chair, hopes to have a committee version of the capital budget available next week.

Stedman said to expect a "reasonable" but not "earth-shattering" proposal, with projects for communities around the state. He wouldn't say whether he had a spending cap in mind but said he wanted to see a continued focus on saving.

Throughout the Capitol, there've been concerns about the size and sustainability of the state's overall budget - particularly in light of the projected continued decline of oil production from the North Slope.

Oil revenue is a lifeblood to the state; last year, Hoffman said, legislators cut $488 million from the capital budget, amid concerns about low oil prices. Higher-than-expected prices led to a revised revenue forecast - projecting a $2.2 billion surplus for the current fiscal year, ending June 30.

The House on Monday made good on making reality two long-time priorities of leading legislators, passing a supplemental spending bill from Parnell that forward-funds K-12 education, at $1.1 billion, for the upcoming fiscal year and repays a more than $400 million debt to a state reserve fund.

Hoffman said lawmakers have been "very responsible" with state coffers. He estimated there'd be $850 million available to spend, for the current and upcoming fiscal years, but said there's "no way we're going to have an $850 million capital budget, even though I'd like to see one."

Hoffman said he'd like to see at least a $488 million budget, to make up for what he said got trimmed last year. He believes the state's economy has suffered somewhat from a lack of infrastructure work.

"It's not as though we haven't been frugal," he said.

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