Alaska editorial

Searching for money in a time of plenty

Posted: Tuesday, April 26, 2005

This editorial appeared in Sunday's Fairbanks Daily News-Miner:

In the continuing debate over the public works budget for the coming fiscal year, legislators and the governor have been in general agreement that the time is right for Alaska to have a fairly substantial one.

But reaching agreement on how to pay for it has had viewpoints as far apart as proposed harbor repairs in Southeast and school renovations in the Northwest Arctic.

Legislators shouldn't - and by most accounts won't - let this opportunity pass for making a major investment in infrastructure. The items proposed so far touch on most every region of the state and make fixes and upgrades to past projects while also building for the future, especially in preparatory work for construction on the hoped-for natural gas pipeline from the North Slope.

With only three weeks remaining in the legislative session, House and Senate, Republicans and Democrats, and the governor himself, have yet to settle on a method of paying for the extensive work list. Progress is reportedly being made, but all of the most-discussed options would do the state well.

Of course, individual political promises and philosophies are the hang-up.

Gov. Frank Murkowski began the session by proposing a $1.4 billion capital budget, which contains nearly $800 million in federal money among its many funding sources and is heavy on transportation projects. DOT, including all funding sources, gets about 58 percent of the money in the governor's budget.

But the governor's proposal, Senate Bill 46, contains his controversial idea to provide some of the money by issuing bonds to support some of his transportation projects and to pay them off by spending the interest earned from a special pot of lawsuit settlement money - known as the Amerada Hess funds - that is held in the Alaska Permanent Fund.

That idea, however, hasn't excited enough lawmakers, many of whom seem to fear punishment from voters if they agree to use this pot of Amerada Hess money - even though the money is doing nothing now, is not considered as earnings on the main permanent fund, and is not a factor in dividend calculations for legal reasons.

So, regrettably, cross that funding idea off the list.

The Senate, meanwhile, recently approved a $300 million-plus partial capital projects bill that is almost exclusively related to education, both for the K-12 and University of Alaska, and provides more in that regard than the governor's bill, which is still needed to meet the rest of the state's construction needs. But that idea, Senate Bill 155 by Senate President Ben Stevens, suffers from an ailment similar to that afflicting the governor's proposed capital budget: It would use money associated with the permanent fund, in this case, the earnings of the main fund. And although the idea has tremendous merit, much like the governor's Amerada Hess proposal, too many members in the House lack the courage of their Senate counterparts to spend the fund earnings. And the governor, who keeps himself wrapped in his lamentable 2002 campaign promise to not spend those earnings without a public vote, has all but said he would veto such a bill.

So strike that fine idea from the list, too.

What other money does Alaska have, then, that can be used to improve so many areas of the state in this golden - though perhaps brief - period of relative financial ease? And what money does the state have that elected officials can spend without worrying about some simple-minded campaign promise they might have made to not spend permanent fund earnings without a vote of the people?

One source is this fiscal year's budget surplus, which is projected to be about $800 million. The governor and Legislature have already set aside half of that for education funding next year, but just what will be done with the rest so far hasn't been resolved. Another source would be the Constitutional Budget Reserve, the account that has been used repeatedly to fill large and small holes in the state budget. The budget reserve contained $2.14 billion as of Friday and is busily earning interest. While the reserve shouldn't be used with disregard as to how it might be needed if the price of oil were to suddenly plunge, it is large enough to help support a capital budget while leaving ample to cope with a major revenue calamity.

Alaska has an opportunity to take advantage of its present financial situation to have a construction budget that includes the Republican and Democratic goal of paying for all of the Department of Education's major maintenance projects, provides for the governor's transportation aims, allows for expansion and upgrades at the University of Alaska, and more.

At this time, and with the days ticking by, Alaskans and their elected officials in Juneau should be open to all of the stated funding sources.

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