Business/Economy

Alaska lawmakers look to once-forbidden sources for money

JUNEAU -- With state budgets under stress, lawmakers looking to keep up the spending are searching in new places for money to keep their favorite programs going. In some cases that may mean they'll be spending money that was approved before but hasn't yet been used.

That's called "reappropriation," or sometimes "clawback," where legislators take back money that was appropriated in past sessions. In other cases, they're looking at money appropriated for endowment-type funds in which earnings are expected to provide ongoing program funding.

But with state budget deficits now estimated at $3.5 billion and readily available savings accounts dwindling, top legislators say little is off the table. They're looking hard for money squirreled away by former legislators, hoping they can get their hands on it without the political consequences of imposing taxes or dipping into the Alaska Permanent Fund.

"Everyone is trying to turn over every rock and stone we have, it's down to pennies, nickels and dimes," said Sen. Anna MacKinnon, R-Eagle River, co-chair of the Senate Finance Committee.

Among possible sources of funds are projects, especially controversial ones, with extra money appropriated to them in the past when their legislative supporters had the power.

That includes some of the state's most notable megaprojects, such as the Susitna-Watana Dam or the Juneau Access road, which have been the focus of heated political battles.

In some cases, attempts are already being made to go after those funds, led by project opponents capitalizing on the state's financial struggles.

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Rep. Sam Kito, D-Juneau, urged the House during a budget debate to sell the steel purchased many years ago for bridges on the road project north of Juneau and currently stored in rented space in Seattle.

"Put some more money in the state's coffers," urged Kito as he pushed for the sale.

As for the $5 million already appropriated for the project, Kito said, put $3 million back in the general fund and use $2 million to reduce painful cuts to the Alaska Marine Highway ferry system.

Kito's budget amendment was voted down along caucus lines by the Republican-led majority.

During public hearings on the House budget proposals, sprinkled among the supporters of schools and other threatened programs, were numerous citizens opposed to the Susitna-Watana Dam.

They saw $33.5 million listed as remaining in an appropriation to the Alaska Energy Authority, and urged that be taken back and spent on other state priorities.

But Alaska Energy Authority Executive Director Sara Fisher-Goad said the information they had was out of date, and that much of that money had been committed to contractors for work done, but for which they'd not been paid.

All but $6.6 million of that money has been "encumbered" she said, and can't be spent elsewhere. By now, those bills have mostly come in and have been paid.

But Rep. Andy Josephson, D-Anchorage, tried to take back what's left.

"It's unfortunate that the only amount that can be reappropriated or clawed back is $6.6 million," he said, proposing an amendment to do so.

The efforts of Josephson, a member of the minority, were rejected by the majority.

But in the Senate, a member of the Finance Committee has also raised the issue.

Sen. Mike Dunleavy, R-Wasilla, wanted to know from Fisher-Goad "if it was possible to clawback that $6.6 million, without that $6.6 million and no additional expenditures this year, could you stay on that track of working on the project?" he asked. He was referring to the dam project getting an environmental permit.

"I don't believe we could," Fisher-Goad said.

Although it would be up to the Legislature to decide on possible clawbacks or reappropriations, Gov. Bill Walker has issued an executive order limiting new spending on several state megaprojects, which would keep money available.

MacKinnon, who oversees the state's capital budget and projects, said her goal in any reappropriation would be to keep the funds local. For example, if a community put all of its lobbying efforts into a specific project, it wouldn't lose out if the work hadn't been done yet due to permitting, financing or other issues.

"Certainly, it has been past practice for the Legislature that if you've acquired money in your hometown, that money should stay in your hometown," she said.

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Reappropriations are not new but, in the past, as appropriations have expired before being used they've usually been reappropriated to the exact same project. Now, there's increasing sentiment that unused appropriations should go back into the general fund where they'd be available for other projects.

In addition to capital projects, several other fund sources are available, including the Power Cost Equalization Fund and the Higher Education Trust Fund. Those are two of the largest funds some legislators suggest tapping to help deal with a budget crisis.

This year, the House began appropriating money from the Higher Education Trust Fund, created in 2013 with $400 million to provide ongoing money for the Alaska Performance Scholarship Program, one of the favorites of former Gov. Sean Parnell.

Rep. Mark Neuman, R-Big Lake, co-chair of the House Finance Committee, defended taking money from the higher education fund.

The Alaska Constitution does not allow dedicated funds, he said, meaning all money is available for appropriation every year. Plus, he said, the education programs the money was used for are "connected with attaining performance," so the money was appropriately spent.

The Higher Education Trust Fund is expected to earn an average of 7 percent annually so it can provide scholarships each year to top-performing students. In last year's strong stock market, it earned more than that. It was the earnings above 7 percent that the House is spending, Neuman said.

Rep. Tammie Wilson, R-North Pole, said spending higher education funds is a first step, but she cited other funds that can be tapped as well. She suggested the $926 million Power Cost Equalization Endowment Fund, which provides money to help subsidize residential power prices primarily in rural communities dependent on diesel fuel for electrical generation.

"Are there other funds, like possibly the Power Cost Equalization, and some of those funds, there's almost a billion dollars in that fund that can be utilized," Wilson said.

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Wilson said that money could legitimately be used for renewable energy projects.

But Sen. Donny Olson, D-Golovin, a Senate Finance Committee member who represents the sprawling, lightly populated northern part of the state, didn't like that idea.

In some remote communities "that's the only way we can heat or have lights on, and it's so dark in the wintertime that far north," he said.

Rural legislators worked hard to get money for the PCE fund when the state was spending hundreds of millions of dollars on natural gas pipeline projects, mainly for urban areas.

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