House spending tamed at $2.28 billion

Capital budget smaller than Senate version, but cuts out schools

Posted: Thursday, May 19, 2005

As promised, a panel in the Alaska House on Wednesday approved a public works budget that is cheaper than the Senate's and leaves out a number of school districts waiting for construction and maintenance.

With a price tag of $2.28 billion, the House capital budget does not use any money from the state's savings account or future revenue from the Alaska Permanent Fund.

But it does take $60 million from earnings of an oil industry tax settlement invested in the permanent fund - known as Amerada Hess - to spend roads.

The Senate lobbied hard this session to wipe out the state's school deferred maintenance list by selling bonds and repaying them with 15 to 20 years worth of future Amerada Hess earnings valued at $335 million.

But the House rejected the proposal, as it did not want to be committed to such a long-term obligation.

Instead, it condensed Senate Bill 46 and Senate Bill 97 into one bill and removed certain items to make it affordable. The House version is about $175 million less than the Senate's draft and is more similar to the governor's original budget.

The House will soon review the budget for a vote on the floor. If the Senate fights for all items on the deferred maintenance list, the legislators could be stuck in the capitol even longer during this special session.

"I think we're being rational and objective and hopefully we can give the Senate something they can work with," said House Finance Chairman Kevin Meyer, R-Anchorage.

The House's version of Senate Bill 46 includes the supplemental budget for the rest of this fiscal year. That is needed for unanticipated expenses such as damage caused by forest fires.

Spending is higher this year due to current and projected high oil prices. The House wants to spend about $580,000 general fund cash for projects lawmakers kept on a wish list.

The House penciled in construction and maintenance for school districts at the top of the Alaska Department of Education's priority list. Road needs in congested areas and highway construction for anticipated natural resource development were included as well.

For Juneau, the House added $1.4 million for renovations to the Alaska State Museum, which has a backlog of artifacts not on display.

Other legislators also were able to pitch in a few items for their own districts, such as a $2.5 million gymnasium for a charter school in the Matanuska-Susitna Borough.

But not everyone got what they wanted.

Rep. Reggie Joule, D-Kotzebue, tried in vain to get funding for a number of schools ranked lower on the priority list that the Senate's budget would have covered.

"My problem with the priority list is that it changes order every year," he said. Schools on the list for maintenance next year could be reshuffled to the bottom if another school can make a better case for repairs.

Joule also attempted to reinstate an Alaska municipal revenue sharing program that was canceled in 2003 during efforts to try to balance the budget. He proposed using $30 million from the Amerada Hess earnings that the state could draw from each year.

"If we continue not to share revenue with municipalities we will be left with tribes," said Joule, adding that 10 cities have closed their doors due to bankruptcy.

The House instead decided to use the Amerada Hess money for other projects, but members promised to seriously consider the idea next session.

Rep. Eric Croft, D-Anchorage, tried to raise the state's per-student allocation funding with an amendment that would pay for the $38 million increase in retirement aid separately from House Bill 1.

But the committee steered away from any additions that would be dangerously close to depleting their desired $42 million left in the general fund.

Rep. Mike Hawker, R-Anchorage, an outspoken watchdog of budget inflation, said the bill was still out of control, but voted for the budget.

"Without any judgments on this budget, it's just time to bring it to a close," Hawker said.

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