Battle of the bonds

One requires voter approval for statewide projects, one doesn't

Posted: Sunday, April 16, 2000

The Wild West had dueling gunfighters.

The Alaska Legislature has dueling bond packages.

Rather than a speedy hand being the key to victory, the House and Senate are counting on votes and leverage to get their package of harbor, school and transportation projects approved.

The House's proposal would spend $270 million, be backed by tobacco settlement money and wouldn't need a public vote.

The Senate's plan would spend the same amount, be backed by the state and require voter approval.

Both plans include money for school repairs in Juneau.

Sen. John Torgerson, a Kasilof Republican, held a hearing early Saturday for the Senate bond package, while the House Finance Committee was scheduled to hear its version Saturday evening.

A bond package has emerged as one of a handful of key budgetary and policy issues that appear to be a part of lawmakers' plans to adjourn this year's legislative session.

The Senate's version of the bill has a constitutional problem, according to Jim Baldwin, an assistant attorney general.

The type of bonds the measure uses - general obligation bonds - require a vote of the people, and pretty much have to be used for construction of a single kind of public works project, such as roads. The Senate bill, said lawyers for the state and the Legislature, seems to fund too many different kinds of things - from harbors to schools - and projects that aren't steel and concrete, such as deferred maintenance.

Torgerson said he planned to have the original bill split in two in an effort to answer the constitutionally questionable aspects of the bond bill.

The House bond bill gets by constitutional considerations because it would use settlement money expected from tobacco litigation to back its bonds. No public vote would be required and the restrictions that fall on the Senate bill aren't at issue.

Rep. Eldon Mulder, an Anchorage Republican and House Finance Committee co-chairman, said using the $25-million-per-year revenue stream from the state's settlement with tobacco companies would spread risk as well as pay for public works. As it is, he said, there's no guarantee that tobacco companies will pay as much as expected from the settlement. Continued litigation may push them into bankruptcy, Mulder said. If that happens, those who buy the bonds will help take the fiscal hit rather than just the state, he said.

``There's a real strong argument that the tobacco revenue is at risk in the future,'' he said.

Of the $260 million worth of projects listed in both bond packages, $118 million goes to Southcentral communities, with Anchorage netting $95 million. More than half of the Anchorage money is for school construction and repair, as is practically all of the $97 million aimed at rural election districts.

Fairbanks is limited to money for deferred maintenance of the town's University of Alaska campus, which would get $25 million of the money.

Southeast would get $23 million, roughly split between harbors and schools. Included is funding to fix the roofs at Auke Bay Elementary School and the former Marie Drake Middle School. Of the money in the bond package, Juneau gets $7 million.

There is no money included for the town's plan for a second high school.

Sen. Kim Elton said he would have liked to see that and another $7.6 million for a 16-classroom expansion at the University of Alaska Southeast. An amendment offered in the Senate Finance Committee by Sen. Al Adams, a Kotzebue Democrat, was voted down.

Elton, a Juneau Democrat, said he prefers the House's bonding method - the tobacco settlement approach - but has an underlying concern about both bond packages. He doesn't think either measure will satisfy the filers of a lawsuit that led a court to rule the state doesn't spend enough money on rural schools.

It should, he said, or it could cost the state a lot more money in the future.

Mulder said the bond package needs to be taken in context with the capital budget bill, which funds more than $1 billion of public-works projects.

``We did the balancing act between the capital budget and the bond package,'' Mulder said. ``We put together something that gave something to everyone.''

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