So will fixing roads and other infrastructure, addressing the controversy over proposed changes to mixing zone regulations and moving forward with a plan to build a natural gas pipeline.
But topping the list this year is what to do with the estimated $1.2 billion oil revenue surplus.
“It’s a tremendous responsibility,” said Senate Majority Leader Gary Stevens, R-Kodiak, whose district includes the southern peninsula. “It’s an enormous windfall. It’s incumbent upon us to make the best use of this opportunity.”
Gov. Frank Murkowski’s proposed 2007 capital budget includes plans to spend most of the expected surplus: $565 million to the newly created Public Education Fund, $400 million to a natural gas pipeline, and another $130 million for public safety, corrections and gas line preplanning expenses.
“I’m not sure I agree with all the governor’s plan,” Stevens said. “I do agree with the funding of education. That’s an excellent idea.”
But the governor’s proposal to appropriate $400 million as a down payment on $4 billion in state funds he thinks the state should invest in pipeline construction needs more scrutiny, Stevens said.
“I’m not convinced it is the role of government to own a facility like that and take a chance with the people’s money like that,” Stevens said. “There are no guarantees. I’m a little hesitant to wager the public’s money on something the industry is not willing to do. But I have not made up my mind.”
In spending state money on the project, Alaska would become a part owner in the pipeline.
In the House, Rep. Paul Seaton, R-Homer, said he favors a cautious approach to capital spending that focuses on fixing things Alaska already has.
“We are facing real decisions on infrastructure maintenance versus funding new projects,” he said. “I think, for instance, we need to take care of the STIP (State Transportation Improvement Program) list projects before going into new projects.”
Election-year pressure to spend capital money is hardly a new phenomenon, but reducing debt has more appeal than bringing home the bacon in new capital projects, at least for him, Seaton said.
Another idea being discussed is putting money back into the Constitutional Budget Reserve. The state’s rainy-day account has been drained in recent years to balance annual state budgets.
Seaton is somewhat critical of that option, arguing it won’t save the money, only make it a little harder to spend. It would take a supermajority of both houses to pull money out for general fund spending.
Lawmakers also could find themselves in a fight over the school area-cost differential formula, the method used to distribute state money to school districts. The Kenai Peninsula and Kodiak school districts have argued for years the current system is inequitable and they have been shortchanged. For instance, the Kenai Peninsula Borough, which includes some fully rural, isolated schools, is treated as a whole almost as if it were urban.
“It’s been inequitable for too many years, and some districts are getting further behind,” Seaton said. “Hopefully, we can get some political compromises in the end so we can move forward.”
Another issue is the cost of public employee and teacher retirement systems, often called PERS/TRS. The state is facing a $6 billion retirement debt in the next 25 years.
A bill passed last year, Senate Bill 141, will initiate a new retirement program for unvested teachers and public workers starting July 1. It will create a defined contribution system, rather than the defined benefit system in existence now.
Stevens called the looming retirement debt “a big hole,” but sought to ease concerns of current employees that they will lose when the new program goes into effect.
“No rights will be taken away from anyone who is employed now,” he said.
Creating a program to ease future expense is one thing, but it doesn’t address the debt posed by the state’s obligations to current workers. Stevens said one source of funds might be the Amerada Hess money within the Alaska Permanent Fund account
“It should be considered,” he said, though he acknowledged there are hurdles to be overcome.
Seaton is preparing a bill to retain the state’s existing mixing zone standards and encode them in statute. He isn’t supporting proposals currently under consideration by the Department of Environmental Conservation that could result in pollution permits in rivers and streams where none is allowed now.
He also will push his House Bill 25, a measure that aims to return more fish tax revenue to the areas in which it is generated.
High on the list of interests being expressed by local governments is state financial aid to communities. Seaton said there are “real possibilities” that some kind of municipal revenue sharing would be passed, perhaps using the Amerada Hess money now in the Alaska Permanent Fund account.
The Legislature should avoid “one-time money” in favor of a sustainable program of funding aid to financially strapped boroughs, cities and towns, he said.
Next year is an election year. Ten Senate seats and all 40 House seats are up for grabs.
Hal Spence is a reporter for the Peninsula Clarion.
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