Parnell slices $400 million from Legislature's capital spending

UAA sports arena request left intact; Homer gas line axed.

June 29, 2011 

Gov. Sean Parnell on Wednesday vetoed some $400 million in spending, including energy projects, weatherization and rural school construction. Parnell said his vetoes would leave the capital budget at about $2.8 billion, including a billion dollars going into energy projects.

He left the entire $34 million in state spending for the new University of Alaska Anchorage sports arena and cut $500,000 from the $2 million appropriation the Legislature approved to help the struggling Great Alaska Shootout basketball tournament.

Parnell vetoed $7.5 million of the $37.5 million the Legislature appropriated for the troubled Port of Anchorage expansion project and cut the entire $4 million for the creation of the Waldron Lake park in Anchorage.

He vetoed the full $10 million for the Homer-area natural gas pipeline project, an effort to extend a line from Anchor Point to bring gas through the Homer area.

The state has a huge budget surplus and Parnell said he liked the projects funded by the Legislature. But he said the steadily declining oil production on the North Slope and pension liabilities mean so much state spending in a single year isn't sustainable.

Parnell compared his approach to his love of ice cream.

"I love to have a bowl of it at night. And if you put half a gallon of ice cream in the freezer, you can go get the half gallon and you can eat it all in one night, because you like it. Or you can save something for tomorrow," Parnell said. "That's what I've done."

Parnell cut $25 million from the $126.5 million that the Legislature wanted to spend this year on the Alaska Housing Finance Corp.'s home energy rebate and weatherization programs, which help Alaskans upgrade their homes. He also vetoed the full $6 million for upgrades to the Noel Wien Library in Fairbanks and $1.5 million for improving the Anchorage Football Stadium.

"There are lots of good projects where there are vetoes made. But these are projects that we will consider again next year," the Republican governor said.

RETALIATION? 'I WOULDN'T DO THAT'

Anchorage Democratic Sen. Bill Wielechowski argued the energy vetoes didn't make sense. He said he suspects Parnell made them in retaliation for the Legislature rejecting his effort to reduce oil taxes.

"When you have $15 billion sitting in the bank and you have the people of the state paying the highest energy costs in the country, I can't think of any other reason why he would have done it," Wielechowski said. "These are projects that would have helped provide lower cost energy, more reliable energy."

He said he was talking about projects including the AHFC energy rebate, money for the Southeast energy fund, Anchorage-area transmission line and substation work and the Homer natural gas pipeline project, among other things.

Parnell said during the legislative session that he'd need to cut spending if the oil tax cut didn't pass. He called it a signal lawmakers were willing to leave the state with a future of lower oil production. But he said Wednesday that his vetoes were not in retaliation.

"I wouldn't do that," Parnell said. "I didn't do that."

Parnell said he left a billion dollars in energy projects, describing that as a highlight of the budget. He brought up projects including $65 million to work toward the proposed Susitna dam project, money for hydro in Southeast Alaska and to work toward a possible small-diameter natural gas pipeline from the North Slope to Southcentral Alaska for instate use.

Sitka Republican Sen. Bert Stedman, the main architect of the budget in the Senate, said the vetoes could have been worse. Stedman said some good work was funded and it does not appear to him as though Parnell was retaliatory over the oil tax.

"I'm sure there are things he took out that he would be inclined to have in other budgets and I'd like to have a conversation with him on what items are really worthy of that," he said.

The Alaska Democratic Party slammed Parnell for not vetoing the $26,100 raise in pay plus benefits the state salary commission set for him and the Legislature didn't oppose. The commission decided Alaska governors should make $145,000 instead of $125,000.

House Minority Leader Beth Kerttula said it looks to her like Parnell's vetoes targeted Stedman and Bethel Democratic Sen. Lyman Hoffman. Both are influential Senate budget leaders who fought with Parnell on the oil tax and other matters.

"It looked like he focused rather politically on Senators Stedman and Hoffman," said Kerttula, a Democrat who represents Juneau.

Hoffman's Western Alaska district was hit hard. Parnell vetoed $7.6 million of the $17.6 million that the Legislature appropriated to start work on the Chikuminuk hydro project near Bethel.

The governor also vetoed $19 million for major maintenance at the Tununak school and $4.7 million for the Yuut Elitnaurviat vocational school in Bethel. Parnell acknowledged heavy vetoes in that area but said it still ended up among the most heavily funded parts of Alaska in the capital budget.

The state House district that includes Bethel ended up with $114 million funded in the capital budget, including $28 million for school renovation work in Quinhagak. Parnell vetoed $34.6 million from the House district.

OPERATING BUDGET INCREASES 2.9 PERCENT

Parnell's vetoes focused on the capital budget, which generally funds projects lawmakers want. He didn't make any real vetoes from the larger state operating budget that pays for agencies and services.

Parnell said the operating budget grew by 2.9 percent and offered little room for him to cut. He said it includes statutory increases in funding for schools, Medicaid, retirement system liability, debt costs and employee contracts.

"I can certainly hit $10,000 here or $40,000 there but it would not make a difference in the $400 million scheme of things. Because I can't get to those parts of the operating budget that are driving that upward increase in spending, like Medicaid," he said.

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