Gov. Sean Parnell signed the state's three budget bills Wednesday without using his line-item veto power, declaring instead that the combined 2015 spending plan was responsible and within the state's means even though it's more than a billion dollars in the red.
At a news conference at his Anchorage office, Parnell surrounded himself with some of the Republican legislators who passed the bills, including the co-chairmen of the Senate Finance Committee but not the counterpart co-chairmen in the House, who were both absent -- one is retiring and the other is running for the Senate.
The three bills -- $11.2 billion for state operations, $2.5 billion for capital projects and $245.5 million for mental health programs -- fell within the spending target he set before the Legislature convened in January. For the second year in a row, Parnell said at a news conference, legislators shaved a billion dollars from state spending. He said the state had a "fully functioning Legislature and administration."
"Alaska's financial future is bright and we're on a sound financial footing," Parnell told the lunch crowd at the Anchorage East Rotary Club about an hour before he signed the budget bills in his Anchorage office.
The 2015 plan requires taking a big chunk from savings -- $1.4 billion under current revenue predictions. Opponents of the big oil-tax cut passed by the Legislature in 2013 -- Senate Bill 21 -- say it's a key reason for the deficit. Parnell and Senate Bill 21 supporters say revenues have declined because oil production has fallen. The tax cut is supposed to reverse that trend by encouraging new drilling.
The current year's budget, the first under the new tax scheme, is also in deficit -- $1.7 billion.
Parnell said the budgets he was signing will spend $5.9 billion out of the general fund, down from $8 billion in 2013 and $7 billion in 2014.
The budget includes $55 million for the Knik Arm bridge, $20 million for the Susitna River hydroelectric dam and 22.8 million for renewable energy projects, Parnell said.
So far, there's no money for expanding Medicaid to the uninsured, a point that brought a sharp question from a Rotary Club audience member who wondered why Parnell wasn't helping Alaska's most vulnerable population -- the children of low-income parents.
Parnell said he agreed that the state was obligated to provide medical care to low-income Alaskans, and said that was already being done for primary care at clinics across the state. He acknowledged that hospitalization and care for the chronically ill was lacking but said he didn't want to accept federal funds to expand Medicaid to that population. Instead, he said, the state is studying other ways of reaching them, but he wouldn't say when an actual program might be in place.
One of his opponents in the November election, Democrat Byron Mallott, said his first act as governor would be to expand Medicaid.
Parnell said his idea of a long-term fiscal plan is to continue to reduce spending and promote more oil production, the source of most of the state's revenue through taxes and royalties.
"Historically, we've always drawn from our savings in times when price and production were down, and we have banked the surpluses when our prices have been up. That's what we're doing now -- we're using the savings while we're reducing spending," Parnell told reporters at the news conference. "The idea is to continue conserving savings by reducing spending and also by getting new production into the pipeline to ramp up the revenue side of the equation."
Parnell said he couldn't predict or plan for when the state might no longer need to pull money out of savings.
"It could be next fall," he said. "We are so subject to the vagaries of the price of oil -- it really does depend upon price in the near time and production and price in the long term."
Reach Richard Mauer at firstname.lastname@example.org or 257-4345.
By RICHARD MAUER