Senate OKs $2.4 billion for projects

House: Budget is too big, costly

Posted: Wednesday, May 18, 2005

The Alaska Senate on Tuesday unanimously approved a list of $2.4 billion in construction and roads projects for the rest of this fiscal period and next year, including a wish list of school and university construction and maintenance items.

The Senate has nothing left on its agenda but conference committees on unfinished bills.

Included in the capital budget are $5 million for a Glacier Highway extension to Cascade Point, $4 million for maintenance at Glacier Valley Elementary School, a new roof for the Juneau Pioneers' Home, and funding for the University of Alaska Southeast's Lena Port facility.

Propping up the budget is $335 million in earnings from an oil industry tax settlement invested in the Alaska Permanent Fund and known as Amerada Hess. The settlement earns about $30 million a year.

The Senate rescinded its previously approved capital budget to rearrange items to be paid with the Amerada Hess earnings.

If the House approves Senate Bill 97, for the next two decades those earnings will go toward school and university construction and maintenance projects that have been neglected over the years.

Senate Bill 46 would lay the foundation for the "roads to resources" project that would build roads in anticipation of oil exploration in the Arctic National Wildlife Refuge and construction of a natural gas pipeline.

"If we fund these projects, it doesn't mean that they will be built this year," said Senate Finance Chairwoman Lyda Green, R-Wasilla. The items could move into the planning phase and be staggered over time, she said.

The capital budget is one of the few bills that lawmakers are obligated to pass before they go home. While the Legislature is held over in a special session costing the state $30,000 a day, the House has been waiting to review the Senate's capital budget.

"I'm just glad we have something to work with," said House Finance Chairman Rep. Kevin Meyer, R-Anchorage. He expects to discuss it today in a committee.

Opposition to these bills is not over the content, but its size and price tag. Meyer said it was too big.

"I think Jenny Craig would have a problem with this budget," said House Minority Leader Ethan Berkowitz, D-Anchorage. Members of the House said they would likely trim some items, such as an ambiguous allocation for the "purchase of a replacement aircraft" that could be used to buy the governor a jet.

Sen. Gretchen Guess, D-Anchorage, attempted to alter the budget language to prevent the administration from buying a jet with that money. Her amendment failed on the floor as a member of the Republican majority said it would deflate funds from the Department of Public Safety.

The battle in the House is likely to be over the use of the Amerada Hess earnings. Meyer is uncomfortable with the money being tied up for the next 15 to 20 years.

"Maybe next year we will need that money for revenue sharing or road projects," he said.

Before the Senate passed the capital budget, it also passed two other pieces of legislation - Senate Bill 121 and Senate Bill 122 - establishing a corporation to sell bonds and repay them with the tax settlement earnings.

Sen. Hollis French, D-Anchorage, said "permafund zealots" could challenge this in court because they were not on the governor's agenda for the special session.

"When he was talking about permafund zealots, I think he was talking about me," said Rep. Harry Crawford, D-Anchorage, an opponent of government use of money invested in the permanent fund.

Senate President Ben Stevens, R-Anchorage, said he supports using Amerada Hess funds because the House has rejected other options.

Green said unanticipated setbacks such as last year's forest fires and rising fuel prices added to the call for more projects this year. The state also is taking the opportunity to spend generous federal grants that must be matched with state dollars.

• Andrew Petty can be reached at

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