Alaska editorial: With $8 billion state surplus, there's room to work things out

Posted: Thursday, April 10, 2008

The following editorial first appeared in the Anchorage Daily News:

Gov. Sarah Palin's spending vetoes weren't a surprise, but the muted reaction from legislators was. Lawmakers didn't blast the governor because, in most cases, she made it clear she doesn't wish to kill the projects outright.

What she found objectionable was putting them in a fast-track supplemental funding bill instead of the regular capital budget. She invited legislators to shift most of the vetoed projects onto the normal funding track - an artful way of making her point without causing real pain.

But in the end, the governor's point was a pretty technical one that probably doesn't matter all that much to voters.

What matters is whether legislators and the governor are striking a responsible balance between saving and spending today's enormous state surplus.

And on that front, there's more agreement than you might think, given the parties' recent rhetorical sniping. The state will be saving a big chunk of the estimated $8 billion surplus that will accumulate by midsummer next year.

The $70 million of local projects at risk of veto were just a small part of the overall funding bill Gov. Palin signed Thursday. The measure put an astounding $3.6 billion into two key state savings accounts. That's 16 times the amount lawmakers steered into the accounts during last year's session. It's nine and a half times what Gov. Palin proposed depositing back in December, before the latest revenue forecast added billions to the state's surplus.

And there are more savings to come. The Senate's budget plan puts another $1 billion into the constitutional budget reserve. Even if that deposit happens, there will probably be money left over next spring, which could be stashed into savings. By then, lawmakers should have enough left over to finish repaying the entire $5.2 billion the state withdrew from the constitutional reserve in leaner years.

On the operating budget side of things, this year's work has been relatively peaceful. Gov. Palin proposed a significant, but defensible, increase. The House and the Senate have voted to trim back the governor's plan, but their versions still increase funding for basics like education, troopers, prisons and health care.

There's still one area of significant budget conflict, though. The Senate's capital budget deliberately left out some statewide projects from Gov. Palin's list, such as North Slope haul road repairs, bridge repairs and other maintenance backlogs. We hope it was just a maneuver to create negotiating leverage rather than a fit of political pique, designed to punish a popular governor for daring to intrude on legislative spending prerogatives.

In Alaska, as in politics anywhere, money is the lubricant of compromise. But when politicians are spending money, the give and take can easily get out of hand. That's where Alaska's governor, armed with a line item veto, has to be willing to step in.

Alaska is amazingly fortunate today: While much of the nation is looking at a recession, the state has an $8 billion surplus - almost $12,000 per resident. Lawmakers can put away billions in savings and still boost investments in state services and fund a wider range of legitimate projects, even if some of them are not drop-dead essential. There's plenty of room to craft a responsible budget that spends more than the governor would prefer and less than re-election minded legislators would like.

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