Murkowski signs largest-ever capital budget

Gravina Island bridge, road extension out of Juneau make the cut

Posted: Sunday, July 02, 2006

JUNEAU - Some 1,200 individual projects around Alaska will get a boost from the state's largest-ever capital budget this year, but utility improvements in the south-central region will not be among them.

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Gov. Frank Murkowski signed a nearly $3.5 billion capital projects bill on Friday sending a flood of money into roads, schools, ports, museums and ice rinks around the state.

The state's bounty is the product of record high oil prices this year that pumped an extra $1.4 billion into the state treasury.

"We're using the surplus to help the state catch up, but we are also using it for what we believe is the future of Alaska and what Alaska deserves," Murkowski said at the Anchorage signing.

The governor, however, shocked some lawmakers and utility managers when he used his veto powers to cut $73.5 million from railbelt utility projects.

"Why this happened without any discussion with any of the people that represent the areas affected. ... I'm speechless, I just don't understand it," said Sen. Tom Wagoner, R-Kenai.

Wagoner's district is home to the Homer Electric Association, which stood to gain $12.5 million to restart the moribund Healy Clean Coal Plant.

The eight vetoed appropriations to projects in Healy, Seward, Anchorage and the Matanuska-Susitna Borough would have come from the state's Railbelt Energy Fund - the remainder of a pot of money that was created more than two decades ago to fund a mega-hydro project on the Susitna River that never materialized.

In a press release on the capital budget, Murkowski said he vetoed the projects because they did little to encourage the state's utilities to work cooperatively to address future energy needs.

The governor's office did not respond to a request for more information on the vetoes.

Tuckerman Babcock, human resources director for the Matanuska Electric Association, said the utility had been assured by officials with AIDEA that the deal was guaranteed.

"There was no heads up for utilities or legislators. Just a flippant and last minute decision by the governor that betrayed his own promise to sign it," he said.

Babcock said the deal was an effort to use up the funds "so we could all stop fighting and squabbling over them."

Rep. Beth Kerttula, D-Juneau, wasn't convinced the plan would have shared the money fairly.

In fact, she said, the railbelt energy fund was the main reason she voted against the capital budget. She said the issue needs more study.

"It's a lot of money. There was a lot of infighting about it and that's something I think should have taken a little more time and effort into looking at how it was going to come out," she said. "I think (the governor) did the right thing by vetoing it."

The governor also vetoed a $100,000 nanotechnology grant for Wasilla, a $200,000 totem pole restoration in Kake and half of a $100,000 appropriation to a WWII Lend-Lease Memorial Park at the Alaska Siberian Research Center.

The most contentious items remained in the capital budget: $93.6 million for the Knik Arm Crossing in Anchorage, $91 million for the Gravina Island bridge project in Ketchikan and $45 million to extend the highway north of Juneau.

"Some of the pundits outside the state suggest we have roads to nowhere. We think we have roads to somewhere and we are going to make damn sure we do," said Murkowski.

Co-chairman of the House Finance Committee Kevin Meyer, R-Anchorage, said the final budget meets a lot of pent-up construction and maintenance demands in the state - the result of years of budget deficits.

"We got a lot accomplished and were still able to save some," Meyer said.

The budget sets aside $400 million for education for the fiscal year beginning July 2007, and $300 million for future public works projects, which could include the state's equity share in a proposed natural gas pipeline project.

Appropriations also include $49 million to communities to offset the high cost of fuel and another $19 million to help cover the higher costs of public employee retirement systems.

The budget also earmarks $73 million for three new rural schools, but that money is contingent on the Legislature passing a new oil tax bill.

The same goes for a $183 million appropriation to the power cost equalization fund, which is a subsidy to help rural residents with the high cost of energy in bush Alaska.

Meanwhile, those challenging Murkowski for the Republican nomination in the governor's race criticized his work on the budget.

Former state senator John Binkley of Fairbanks said the capital budget should be an embarrassment to a governor who bills himself as a fiscal conservative.

"The governor needs to be the adult in the household when it comes to budget responsibility," Binkley said.

Former Wasilla Mayor Sarah Palin said lawmakers should have set aside more of the surplus for the years ahead.

"This budget will look odd to Alaskans coming from a Republican governor and a Republican Legislature," said Palin. "I think there's going to be some confusion there."



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