Parnell strikes $300 million from state budget

Posted: Friday, June 04, 2010

Gov. Sean Parnell denounced a "spike" in spending by the Legislature, but then issued a relatively modest slate of vetoes Thursday - about $300 million out of a $3.1 billion capital budget.

Dan Joling / The Associated Press
Dan Joling / The Associated Press

Much of Parnell's vetoes were focused in Southeast Alaska, though Juneau was not hit as hard as some neighboring communities.

"I'm disappointed with the cuts, but overall we did well in the capital budget, even with the cuts," said Rep. Cathy Muñoz, R-Juneau.

Among the cuts in Juneau was a $5 million appropriation to begin work to develop a new state office building that was reduced to $2 million.

"It's not what we were hoping for, but $2 million is more than enough to do the planning and design," Muñoz said. Additional costs such as engineering and land acquisition may have to wait until future years, she said.

Other local cuts include sewer funds for the city, a Native cultural and visitor center, and a regional fund for dock and harbor improvements.

Neighboring communities such as Haines, Skagway, Hoonah, Gustavus and Elfin Cove took important hits; bigger projects were cut in Sitka, Ketchikan and Kake.

At an Anchorage press conference announcing the vetoes, Parnell criticized other states with financial problems for overspending during good times.

"When times were good, they took a 'Let the good times roll,' mentality," he said. "Alaska is going to take a different approach."

Yet he described a plan to spend most of this year's ample oil revenues to ensure a "healthy capital budget," and help the state's economy grow.

After announcing the vetoes, Parnell said his budget would "save $400 million for future investment" but later said he would support a plan to borrow $400 million for additional spending this year.

"The governor is planning to spend the well dry," said Ralph Samuels, a former Anchorage legislator who is challenging Parnell in the Republican primary.

The state is still spending less than it is bringing in this year, said Karen Rehfeld, Parnell's Director of the Office of Management and Budget. The supplemental budget passed this year included a $401.6 million appropriation to pay back money borrowed from the Constitutional Budget Reserve in lean times, and that is money that will be available to the state in later years.

Many of the cuts were intended to let projects continue, but they'll have to get additional money in future years' budgets or elsewhere.

A new state library, archives and museum (SLAM) building had $1.5 million cut by Parnell from the operating budget, although $18.5 million remains in the state's bonding plan, which requires voter approval.

Rep. Beth Kerttula, D-Juneau, said she was disappointed that Parnell chose to cut there.

"I hated to see the SLAM project get its tiny portion of the budget cut," she said.

Rehfeld said much of the $90 million project was going to have to be funded elsewhere or in later years.

"There's a lot of ongoing discussion about how we are going to fund that project over time," she said.

Juneau also lost $1.5 million for a $3 million sewer project, while Sealaska Heritage Institute saw its legislative appropriation of $4 million for a Native Cultural and Visitor Center decreased to $2 million.

The Office of Management and Budget this year did not list vetoes by region as has been done in previous years, but a review of the vetoed projects seems to show a disproportionate number in Southeast Alaska.

"We noticed," said Rep. Bill Thomas, R-Haines.

Among the projects his district lost was money to continue a marine industrial center the city of Hoonah is building, hoping to expand its economy with boat repair businesses.

"Now we've got a partially built haul out," Thomas said. "We don't put capital projects in the budget lightly, we use them to create jobs."

Additional vetoes by Parnell went to statewide programs that are particularly important to Southeast. He cut half the $10 million appropriation for the state's docks and harbors grant fund.

"Every year I submit an application for that program," said John Stone, Juneau's port director. Now he's wondering what the future holds for the Statter Harbor funding he'd hoped to get this year.

Rehfeld said no districts were specifically targeted or spared by Parnell.

"There was no intent to go and make more reductions in one district than another," she said. "That just wasn't happening."

"A major portion of that (harbor grants) would go to Southeast, so we probably got hit harder than we think," Thomas said.

"On the whole, Juneau fared well," Kerttula said. "Not as well as some places, but better than other districts in Southeast."

Thomas said he was still happy there was so much money available, despite the vetoes, and didn't want to publicly criticize Parnell.

"We've got four more years with this guy, so we can't make him mad," he said.

• Contact reporter Pat Forgey at 523-2250 or

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