Alaskan Budget

Posted: Thursday, May 17, 2007

Alaskan budget



A last-minute budget agreement enabled the Legislature to end its session as required by midnight Wednesday. The Legislature reached an agreement just before midnight on a plan to fund schools, share revenue with communities, and deal with the rising costs of state retirement programs.

Several legislators expressed concern that the state was spending too much money, especially with oil production declining at a rate of 6 percent a year.

Sen. Lyman Hoffman, D-Bethel, one of the key budget negotiators for the Senate, said the budget was actually fairly conservative, and even put money away for the future.

"This Legislature did not spend every dollar, said Hoffman, co-chair of the Senate Finance Committee. Hoffman said the budget set aside $1 billion for education next year, as well as making a $50 million contribution to the Constitutional Budget Reserve, the first time that has happened in years.

Hoffman is a member of the Senate Working Group, the bi-partisan coalition that controlled the senate under the leadership of Senate President Lyda Green, R-Wasilla.

Senate Republican Minority Leader Gene Therriault, R-North Pole, said he was concerned for the overall level of spending, and questioned whether it was sustainable.

The budget passed 14-5 in the Senate. In the House, Rep. Mike Doogan, D-Anchorage, also objected to the overall level of spending. He acknowledged that some of the money that appeared to inflate the budget was actually being set aside for the future, but "we're still spending a tremendous amount of money."

One place some of that money will be spent is in Anchorage. A last minute adjustment to the revenue sharing system, through which the state government share's some of its oil wealth with cities and boroughs.

One of the key negotiators on the House side was Rep. Kevin Meyer, D-Anchorage.

Wednesday, the revenue sharing plan in the state's capital budget was re-written during the negotiations, to Anchorage's advantage.

That gave Anchorage millions more than had previously been proposed, though the big boroughs saw gains as well. Most small communities were losers, some big losers.

Juneau was overall winner in the revenue sharing scheme, gaining nearly 10 percent over the original plan, but Gustavus, Kake and Angoon were all losers.

Taking the biggest losses in what they were expecting were Kotzebue, Barrow and Bethel, each down 60 percent or more.

Rep. Mary Nelson, D-Bethel, said many rural legislators may not have realized how much they were voting to give away to Anchorage, but her motion to reconsider the vote failed on party lines.

Meyer said the capital budget also includes numerous projects for communities around the state, where the state will pick up costs the small cities won't have to pay for.

"I would say the capital projects are revenue sharing," he said.

Rep. Les Gara, D-Anchorage, said those capital projects were doled out based on party affiliation in the House, which is not how the state government should operate.

Gara said House Districts 1 and 2, represented by Kyle Johansen, R-Ketchikan, and Peggy Wilson, R-Wrangell, each got an extra $500,000 because they were in the majority party.

"We should not spend money in this state based on party membership," Gara said.

Several plans to make changes to the school funding Foundation Formula foundered, but lawmakers agreed upon a one year solution. During that time they'll try to come up with a better, longer term solution.

"We've agreed to continue this work through summer," he said.

Late in the day the House of Representatives also gave final passage to the Alaska Gasline Inducement Act, Gov. Palin's signature bill from the session. The act is intended to place the state in a strong position to get a natural gas pipeline to bring its vast North Slope reserves to Lower 48 markets.

The companies now producing oil on the North Slope and holding gas reserves there opposed the plan, but legislative opposition to the plan faded late in the session when three current and former legislators and two oil executives were indicted on bribery charges.

Rep. Vic Kohring, R-Wasilla, is out on bond after being indicted on several federal corruption charges. He skipped the vote on AGIA, as he had earlier.

John Bitney, Gov. Sarah Palin's legislative liaison was working the budget process during the final day as a buffer between the House and Senate.

Watching the final vote just before midnight, he said he was generally pleased with the outcome. "There's some things we still need to review, but overall it looks pretty good," he said.

• Brittany Retherford can be reached at

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