Parnell unveils $11B spending plan

Posted: Thursday, December 16, 2010

Gov. Sean Parnell promised his new budget would both hold the line on state spending, and continue his confrontational stance towards the federal government.

Presenting his proposed 2012 state budget to the Anchorage Chamber of Commerce Wednesday, Parnell said the $11 billion spending plan doesn't include $123 million in Medicaid increases that Alaska is obligated to make.

That's a cost that was picked up by President Barack Obama's stimulus program for the current year, but is now the state's responsibility.

Parnell said he budgeted for the regular cost increase, $46 million, but not the extra $123 million, and would be banding together with over governors to try to get the federal government to absorb that increase.

"They made this mess, and I'm challenging them to clean it up," he said. The federal Medicaid program provides 150,000 Alaskans with health care, but the program is formula-driven, he said, meaning that if more people qualify for coverage, the Medicaid program is required to pay for the cost. States pick up 35 percent of the cost of Medicaid.

A new Republican majority in the U.S. House of Representatives may provide some assistance for the states, Parnell said.

If the federal government gave the states flexibility to spend Medicaid money the way they saw fit, Alaska could design a program that met "legitimate" needs of its citizens at lower cost, he said.

The feds should either pay for what they mandate, or give states flexibility to trim costs, while still taking care of Alaskans, he said.

Parnell acknowledged that he didn't know whether the state's effort at resisting the extra cost would be successful.

"Alaska may be required to pony up the $123 million," he said.

Elsewhere, Parnell said he'd budgeted an extra $1 million to fund legal challenges to the federal government on development and environmental protection issues.

Parnell said it was ironic that the federal government denied Alaska development opportunities, and then passes on expenses to the states.

Legislative leaders met with the governor prior to his budget announcement, and House Minority Leader Beth Kerttula, D-Juneau, said she agreed with Parnell’s strategy on Medicaid.

"What he said was he wanted to see if Congress wouldn't ante up, and I'm all for that if we can get it," she said.

Parnell's budget included a host of less dramatic initiatives, mostly aimed at making government run better and improve people's lives.

That includes an additional $100 million for deferred maintenance of state facilities.

"We're going to fix what we've got," he said.

And he's continuing to add police protection to boost public safety, including 12 new Village Public Safety Officers and three new troopers.

That continues to advance effort to make sure that every child has a safe home and end the state's epidemic of domestic violence. The state has gone from 47 filled VPSO positions to 101, he said. That means help will be available for those who need it, when it wasn't before.

"These were villages that didn't have any law enforcement presence whatsoever," he said.

Parnell promised to advance the state's development by building roads to resources and funding new energy independence efforts. That includes state support for a big new dam on the Susitna River to provide power for Southcentral Alaska, but also includes $10 million for the Southeast Energy Fund.

"For too long Alaska's abundant resources have been locked up," he said.

Parnell said while the federal government has deficits that, if unchecked, would lead to the failure of the nation, Alaska was in great shape financially.

"Unlike the federal government, Alaska has a balanced budget," he said, along with billions in cash reserves.

• Contact reporter Pat Forgey at 523-2250 or

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