Senate capital budget would top $2 billion

The 103-page spending plan unveiled Wednesday in the Senate Finance Committee includes money for hometown projects in every corner of Alaska. There's money for work on roads, airports, court buildings, harbors and school maintenance. The budget totals more than $2 billion after federal funds are included.

State senators called it a jobs bill and said it would put contractors to work at a time when the state is enjoying a surplus from high oil prices. Senators said they've been putting money into savings and now it is time for some spending.

"We don't want to have the state of Alaska in one of the strongest, if not the strongest fiscal position of any state in the nation and then just not flex that muscle in down economic times," said Sitka Republican Sen. Bert Stedman, the main architect of the budget in the Senate.

House members were floored by the size of the budget proposal.

"Frankly, I'm choking on it," said Anchorage Republican Rep. Mike Hawker, who is co-chairman of the finance committee in the House.

Hawker said there are good reasons behind the Senate spending plan. But declining oil production means the state could be looking at budget deficits in just a couple of years, he said.

The spending plan could keep growing, with House members who want to add their own construction projects after it passes the Senate. The $2 billion budget also doesn't include big-ticket projects like a crime lab in Anchorage, a life sciences building at the University of Alaska Fairbanks, and new school construction, that many lawmakers want to fund this year.

Legislators are preparing a separate bond package to handle such projects, although it is not clear which ones will make the cut. The bond proposal is expected to be released this week.

Senators said this year's spending plan makes up for the bare-bones capital budget that the Legislature passed last year when oil prices were lower.

Bethel Democratic Sen. Lyman Hoffman said legislators are taking care of savings. They've set aside future school funding and are finishing repayment of the money the state took from the Constitutional Budget Reserve over the years. The reserve now stands at about $10 billion, with billions in deposits from lawmakers in recent years.

Anchorage Democratic Rep. Mike Doogan said the Senate still wants to spend too much. Doogan said the budget appears to pretty much devour what's a projected surplus based on forecasted continued high oil prices. Doogan said forecasts could be wrong, and the state could get less money than senators are expecting.

"It's a buh-buh-big budget. ... I'm not sure I have the gambling instinct to support it," Doogan said.

The all-Republican Senate minority has no power to stop the bipartisan majority's spending plan, although it will object. Eagle River Republican Sen. Fred Dyson said the state had a big capital budget just a couple of years ago and for the Senate to go even higher "is just really spooky."

The plan adjusted for inflation does not rival the state spending on construction projects during the high spending years of the 1980s. But it could end up being the most general-fund spending since.

Senators said they dropped almost $500 million in projects while paring down the capital budget last year. They said they are now just adding that to what the governor proposed for spending.

"From my perspective, we are barely catching up to the capital needs throughout the state," said Hoffman, the Democratic senator from Bethel. "I view this as a catch-up and a jobs bill."

The budget has money for road work in Anchorage, including $23 million for the New Seward Highway between Rabbit Creek Road and 36th Avenue. There's $18 million for renovation of the Boney Courthouse downtown, and $10 million for Port of Anchorage expansion.

There's $10 million for construction of a Nome museum and $4 million for a Southeast Alaska Native cultural and visitor center. There's money for libraries, power projects and water and sewer systems.

The budget includes $140 million for reimbursement of TransCanada's efforts to build a natural gas pipeline under the Alaska Gasline Inducement Act. The plan includes $160,000 for the lobbying group Arctic Power's longtime effort to convince Congress to allow drilling in the Arctic National Wildlife Refuge.

The Senate Finance Committee's spreadsheet shows the biggest increases in spending over the governor's proposal are in Ketchikan, Sitka, Petersburg and Wrangell. That's in the district of Stedman, the Senate Finance Committee co-chairman who authored the capital budget proposal.

Stedman said the spreadsheet is off, and his district won't be the biggest winner when the bill is done.

"At the end of the day, these won't be the highest districts. As the chairman that wouldn't be appropriate. They won't be the lowest either, as the chairman that wouldn't be appropriate," he said.

An electronic version of the budget was not available Wednesday. Printed copies were being distributed in Juneau.