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Energy studies make dent in Alaska capital budget

Pat Forgey
Capital budget: A study of a new in-state gasline will get additional money that may wind up totaling $400 million, while a larger export gasline being developed under the Alaska Gasline Inducement Act will get an additional $25 million towards a total of about $500 million in state subsidies. The Susitna-Watana Dam project will get $95 million for its studies. Aaron Jansen illustration

The Alaska Legislature this week sent to the governor a $2.2 billion capital budget, smaller than in some recent years but likely larger that can be expected in the future.

The state's capital budget, which along with the operating budget, makes up most state government spending. Capital projects are often such things as buildings, infrastructure and equipment.

In recent years when oil prices and production were higher, capital budgets were
often much larger, too -- sometimes more than $3 billion.

"It's difficult to say 'no' when you have a surplus," said Sen. Kevin Meyer, R-Anchorage, co-chair of the Senate Finance Committee and responsible for the capital budget in that chamber.

Nearly a billion dollars of the capital budget comes from federal funds, so the draw on the state's general fund will be much smaller this year than in recent years, legislative finance leaders said.

This year's budget is much lower, Meyer said, closer to what is sustainable.
Meyer's House of Representatives counterpart, Rep. Bill Stoltze, R-Chugiak, agreed: This is still a very large, robust budget, though it is significantly smaller than last year."

The Legislature this year passed a reduction in oil taxes, which will magnify reductions in oil production in future years, and legislators said lower budgets will be needed in the future.

"We can't depend on this size and scope of budgets," Stoltze said. “They'll be on a level that's more sustainable in the future, which means less."

Both Meyer and Stoltze supported the oil tax cuts, which proponents hope will lead to more oil production and thus raise additional tax revenue in the future. Tax cut disagree, saying the tax cut will reduce state revenue with no likely production gains.

On the House floor, Rep. Les Gara, D-Anchorage, a Democratic leader on budget issues, said the state had spent too much and saved too little in recent years when coffers were flush, but this year's budget was acceptable.

"We can't afford $3 billion capital budgets every year," he said. "I think this is an responsible budget."

Among the budget's most prominent items are additional money for two natural gas pipeline projects, one natural gas trucking project, and a big new hydroelectric dam.

A study of a new in-state gasline will get additional money that may wind up totaling $400 million, while a larger export gasline being developed under the Alaska Gasline Inducement Act will get an additional $25 million towards a total of about $500 million in state subsidies. The Susitna-Watana Dam project will get $95 million for its studies.

The continual spending on studies concerns Gara. "At some point we have to decide what we're going to go ahead with," he said.

The largest number of projects were requested by individual legislators, and go to every district in the state. Projects range from millions of dollars for schools or fire stations to thousands of dollars for new school books and nonprofit grants.

Rep. Scott Kawasaki, D-Fairbanks, provided a definition of what might be seen as budget "pork": "You see things in other folks' districts that are difficult to comprehend why they are in there (that) you might consider pork because they are not in your own district." He assured legislators that none of the items he requested were pork, at least in his view.

One of the larger items is $57 million for school construction as part of the state settlement of the Kasayulie lawsuit that challenged the fairness of rural school funding. The first two of five new schools planned for rural Alaska will be built in the villages of Emmonak and Koliganek.

"That's not just a legal commitment, that's a moral commitment," Stoltze said on the House floor during budget debate.

The University of Alaska will get $30 million to continue work on two new science buildings in Anchorage and Fairbanks. The university faced some legislative criticism for beginning work on the buildings before it had the full funding available to construct the buildings, but legislators grudgingly continued providing construction money anyway.
Legislators provided $4.5 million for research on king salmon declines that was requested by Gov. Sean Parnell, but expanded the research to additional salmon species as well.

The transmittal of the budget from the Legislature to Parnell Wednesday means he has until June 7 to decide whether to sign the budget or wield his veto pen. He has not expressed concern with the size of the budget, but many of the individual projects were not among those he had originally sought.

The budget submitted by Parnell amounted to $1.9 billion, with the Legislature's budget $370 million higher.

Contact Pat Forgey at pat(at)alaskadispatch.com