Senate gives initial nod to 2007 budget

Spending increase of 12.6 percent is less than 20 percent hike proposed by governor

Posted: Friday, April 21, 2006

The Alaska Senate on Thursday tentatively passed an operating budget for next year that includes a general fund spending increase of nearly 13 percent.

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The $8 billion spending plan was approved 20-0, but Sen. Kim Elton, D-Juneau, gave notice of reconsideration of his vote, meaning the Senate can take it up again next floor session.

Senate Finance Co-Chairman Gary Wilken, R-Fairbanks, said the Senate's budget includes $2.95 billion in state treasury spending, up from $2.62 billion authorized last year.

The rest of the $8 billion budget is made up of money from the federal government and other sources.

That 12.6 percent general fund spending increase, while high, is less than the 20 percent increase Gov. Frank Murkowski had requested, Wilken said.

It's also less than the budget the House passed at the end of March. A conference committee will be appointed in the House and Senate to come up with a compromise budget for ratification by the two chambers.

The increases in state spending will be absorbed by expected revenue surpluses this year and next from high oil prices. There is also the prospect that a change to the state's oil production tax now under consideration could bring in another $1 billion in state revenue at current oil prices.

The budget is balanced when oil is at $47 per barrel, meaning there will be a shortfall if the price of oil drops in the future, Wilken warned.

Alaska North Slope crude closed Wednesday at $70.37 per barrel.

Senate Minority Leader Johnny Ellis, D-Anchorage, said he still had qualms about the budget, but that Democrats were included in the process. He voted for the spending plan.

Ellis said he was concerned that public television funding had been cut and he hoped it could be restored in the conference committee.

Also, he said, Democrats want to see a program to financially assist municipalities. He did not offer an amendment because he was assured a separate bill would address municipal revenue sharing, he said.

"We want to come together on that issue before adjournment," Ellis said.

The only amendment offered by Democrats was a proposal to put $700 million of the surplus into the Constitutional Budget Reserve, which the Legislature has used in the past to make up budget deficits.

Sen. Hollis French, D-Anchorage, said the Legislature has an obligation to replenish the account and "leave it there for the rainy day that is certainly ahead."

The amendment was rejected on a party-line vote, with the 12 Republicans voting against and the eight Democrats voting for the proposal.

Also on Thursday, the Senate tentatively approved starting a pilot program to give cash incentives to outstanding teachers and school employees.

The program would give rewards of up to $5,500 for a certified teacher and $2,500 for noncertified employees.

The bill aims to encourage school employees to increase school achievement, said sponsor Sen. Con Bunde, R-Anchorage. The program would end in 2009.

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