Alaska Politics Blog : Tomorrow's budget story today

Tomorrow's budget story today

Posted by Alaska_Politics

Anchorage Daily News

Posted: December 15, 2006 - 8:37 pm

Sorry if this is hard to read. Any headline suggestions for the print edition?

Gov. Sarah Palin proposed a spending plan Friday that would increase the state operating budget by 5 percent while shaking the list of publicly funded construction projects down to the bare minimum.
Palin said she’d resurrect the Longevity Bonus program, which gave a monthly cash payment to seniors, and that she would spend hundreds of millions to plug rising state and local employee retirement costs.
High oil prices poured billions extra into state coffers over the past two years, and Palin’s proposal calls for socking away roughly $1.9 billion of that cash into a rainy day account where it would be tougher for legislators to spend. To keep her operating budget from growing any larger, she said she’ll also direct her commissioners to look for $150 million worth of waste to slice from state spending.
Palin, and Lt. Gov. Sean Parnell — head of Palin’s budget transition team — didn’t have any examples Friday of where those savings might come from.
Still, Parnell said the cuts are a realistic goal because of the steep increase in state spending.
“The budget’s gone from $2.2 billion to the $3.9 (billion) just in the last five or six years.”
Palin’s budget doesn’t include money for mega projects that she supported as a candidate, such as the controversial Gravina Island bridge in Ketchikan.
Asked if she’d changed her mind about the project, Palin said she will hash out where the bridge fits on the state’s list of priorities with the help of the Legislature and public.
“We have a limited pot of money of course, and we need to make wise, sensible choices,” she said.
On the campaign trail, Palin spoke in support of revenue sharing — a program that shared state cash with cities and towns.
Palin’s proposed budget includes about $48 million for what her team calls “local government support,” which is the same amount that’s in this year’s budget.
Palin has been on the job less then two weeks, and said the budget is a work in progress. It’s also only a proposal, and beginning in the January lawmakers will spend four months writing the budget for the state year that starts July 1.
Besides restoring state payments to seniors and buttressing government pension programs, Palin’s budget proposal calls for:
• Repealing a tax on studded tires.
• Cutting the cost of business license fees.
• Paying an extra $100,000 to hire an investigator for the Alaska Public Offices Commission, the watchdog agency that looks into campaign contributions. Palin had said during her campaign that she’d fund the position.
At roughly $3.6 billion, Palin’s proposed operating budget would be an increase of more than $170 million over this year’s budget. Some of that added spending is for costs that automatically go up each year — like Medicaid.
One large chunk is for more than $460 million toward retirement cost increases for state employees.
Palin described her budget is an attempt to make sure the state lives within its means. “We don’t want to spend more than what we make.”
Palin’s team estimates it will cost about $34 million to bring back the Longevity Bonus, which would simply be a return to the old system that gave up to $250 a month to seniors who lived here before a given date. No new names would be added to the list, and the program would phase out over time.
Murkowski ended the Longevity Bonus, but started a program that gave $120 each month to low-income seniors. That program will end this summer unless it’s renewed. Palin said she wants to continue paying for it.
Compared to this year, Palin’s capital budget proposal is slim. It only includes projects that the state has to pay for to avoid losing matching federal funds, and at about $181 million, it would be 25 percent of the state money in this year’s construction budget.
Sen. Gary Wilken, R-Fairbanks, said Palin’s capital budget is a starting point.
Some of the $1.9 billion Palin wants to put into the Constitutional Budget Reserve, the state savings account that can only be spent with a three-quarters vote of the Legislature, will likely end up going to the capital or operating budgets instead, Wilken said.
Think of the capital budget as a car, he said. Palin’s stripped it down to the frame, and the Legislature will put it back together and “make sure it works.”
Parnell said Palin’s budget includes a buffer — an extra $134 million that could either go toward capital projects or the operating budget — and that the new administration will work with Legislators to make a list of priorities.
State Rep. Beth Kerttula, D-Juneau, said Palin’s budget proposal is a good start.
“I’ll take her at her word that this is all up for discussion because she’s going to get a lot of it,” Kerttula told The Associated Press.
Along with stuffing the Constitutional Budget Reserve, the proposed budget would also put more than $1.3 billion of extra Permanent Fund investment profits into the principal of the fund. Doing so would mean legislators couldn’t spend it.
The fund’s investment profits are used to pay the annual Permanent Fund dividend to Alaskans. Parnell said Palin’s team worked with the Alaska Permanent Fund Corp., which runs the fund, to make sure their plan would leave enough money to cover the dividend.

Daily News reporter Kyle Hopkins can be reached at khopkins@adn.com.

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