Clock ticking as Parnell reviews capital budget

Where or what he will cut from the $3B spending bill still unclear

Posted: Tuesday, May 18, 2010

JUNEAU - The clock began ticking Monday on Gov. Sean Parnell's review of a nearly $3.1 billion capital spending bill.

Lawmakers are expecting cuts, but where they happen - and how deep they'll be - remains unclear.

Parnell has said repeatedly that he believes the bill is too big and he has threatened to cut it, but he hasn't given specifics on how he may decide what's in or out. He's been meeting with legislators to hear their priorities and, according to the Legislature's website, has until June 9 to make his decisions.

In an e-mail to The Associated Press on Monday, Parnell said his priorities are found in the state constitution: "resources, education, public safety and infrastructure." He said his review is being guided by a desire to spend less, save more and create private sector jobs.

"We simply cannot count on the price of oil remaining high forever and must spend at a lower, more sustainable level," Parnell said. He promised to be "fair, focused and evenhanded."

The bill lawmakers passed last month ranks as one of the largest capital spending plans Alaska has seen in at least the last decade. Legislative leaders, notably on the Senate side where the bulk of the bill was crafted, have defended the package as within the state's means and necessary to keep the economy going.

They make their point by saying the state has billions of dollars in reserve, that lawmakers voted to repay a reserve fund debt and to forward-fund K-12 education, and there was a relatively slim capital budget for the current fiscal year, which ends June 30.

The overall amount "looks high and is high, but Alaska has a lot of infrastructure to catch up on here," said Senate President Gary Stevens, R-Kodiak. "I don't think it's out of line. I think it's reasonable."

But he said Parnell indicated there would have to be "substantial cuts," and Stevens said he doesn't think it would be practical for the Legislature to attempt any veto overrides.

Some House members lamented the size of the bill and what Rep. Bill Stoltze, co-chair of the House Finance Committee, called a lack of anchor projects - those that are major economic drivers - in the nearly $2.8 billion package passed by the Senate and expanded by the House during the Legislature's last days.

The House put in what it felt was necessary for its members, said Speaker Mike Chenault, R-Nikiski. "Unfortunately, it's rather large."

"If the governor feels the need to cut the budget and is doing it fairly across the board, I can live with that," Chenault said, adding that if he is reelected, he'd work to get any projects cut from his district restored.

Parnell scored some wins in the bill. There's spending for deferred maintenance, which he'd made a priority for the session, and funding for a new crime lab that some lawmakers criticized as too opulent.

The bill includes a mix of big and small projects, including $140 million toward a natural gas pipeline being pursued under the Alaska Gasline Inducement Act, $40 million for a bridge in the Fairbanks area, $57 million for a rail line extension to Port MacKenzie, and authorization for a bond package of nearly $400 million that voters would be asked to decide.

There's a spate of other infrastructure work, too, related to roads, harbors, ports, public buildings, school grants, wind generation, a Medicare clinic and other projects.

Parnell's in a tough spot, trying this year to win outright the job he inherited when Gov. Sarah Palin resigned last summer. One of his Republican rivals, former state Rep. Ralph Samuels, has criticized Parnell for showing what Samuels called a lack of fiscal leadership as legislators approved state spending of more than $11 billion for operating and capital needs in the upcoming budget year.

Sen. Bert Stedman, R-Sitka, said it's the operating budget - not the capital budget - that deserves greater scrutiny. Stedman, co-chair of the Senate Finance Committee, said he doesn't want to see money the state's worked hard to save "consumed" by state agencies and building up government. He said the state can't move forward if it's not investing in its infrastructure and communities.

But Rep. Mike Doogan, an Anchorage Democrat and finance committee member, said there needs to be serious consideration given to spending of all kinds amid oil price fluctuations and projections of continued declines in oil production.

Parnell has blamed entitlement programs, such as education and Medicaid, for the growth in the operating budget. His spokeswoman said Parnell is establishing an executive-legislative task force to create a plan addressing the "unsustainable growth" in the state's Medicaid program, with attention being paid to rooting out fraud and abuse. She said the governor has no plans to overhaul the foundation formula for education.

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