Oil prices help boost Alaska spending

Legislators vote for more than $3 billion in general spending

Posted: Thursday, August 25, 2005

Revenues from record-high oil prices have helped push the state's spending rate to more than twice the national average, state and national analysts reported.

Alaska legislators voted to spend more than $3 billion in general funds for this fiscal year, an increase of almost $400 million, or about 14 percent, over the previous year, according to the Alaska Division of Legislative Finance.

The increase was made possible because the state is flooded with dollars from record-high oil prices.

"We've had the chance to take care of some of the priorities that Alaskans expect will be addressed," said Gov. Frank Murkowski's spokeswoman Becky Hultberg.

Eagle River Republican Rep. Bill Stoltze is concerned about the trend, but said the Legislature was faced with rising Medicaid costs and the need for schools in his district and elsewhere.

"Sometimes you get dealt cards that are tough to meet what your philosophical aspirations are," said Stoltze, who was elected to the House four years ago on a platform of less spending.

Anchorage Democratic Rep. Ethan Berkowitz, the House Minority Leader, said investments were needed in areas such as education.

But he said better planning is needed to avoid tying spending to volatile oil prices.

More than 80 percent of the state general fund budget comes from the taxes and royalties the state makes from oil. Much of the spending came through the construction budget, which saw a drop in federal dollars but a $330 million increase in state general fund spending.

The National Conference of State Legislatures found general fund spending is projected to grow an average of 5.7 percent this year among 46 states surveyed.

South Carolina's spending growth is the nation's highest at 14.7 percent, the report said.

Murkowski has almost finished his third year in office. Legislative finance numbers show state general fund spending went down about $176 million after the governor's first year in office.

But spending rose by $327 million for the next year, after a school funding increase and large supplemental appropriations in areas like Medicaid, firefighting and work related to a natural gas pipeline.

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