Parnell rolls out $12.8 billion budget

ANCHORAGE — Gov. Sean Parnell on Friday announced a proposed state budget that would limit growth in operating costs to less than 1 percent.

At a news conference after unveiling the numbers in a speech to the Anchorage Chamber of Commerce, Parnell said he is proposing an operating budget that spends $9 billion overall and a state general fund portion of $5.7 billion.

That’s 0.8 percent more than this year, he said.

“That is a level of increase that has not been seen in some years,” he said.

Alaskans are not likely to detect changes in the bureaucracy. The lack of growth comes from anticipated savings in Medicaid costs, Parnell said.

Overall, state spending will be down nearly $1.1 billion from this year, Parnell said.

The big difference will be spending for buildings and other facilities. 

Parnell proposed a capital budget of $1.8 billion, down from this year’s $2.9 billion. The state general fund portion of the capital budget would be $795.2 million, down from $1.9 billion this year, a reduction in state general fund spending for capital projects of 59 percent.

Projected general fund revenue is just more than $7 billion. Parnell anticipates a $508 million projected surplus.

Matching last year’s budget would have required a dip into a state savings account.

“I don’t intend to do that,” Parnell said.

Parnell will pitch the proposal to a legislature controlled by fellow Republicans. House Speaker Mike Chenault of Nikiski called the proposal a fair starting point for budget discussions.

“His proposals acknowledge the current reality: North Slope oil production is declining, and the high cost per barrel today is the only thing keeping us ahead,” he said in a release.

Parnell said he will push key initiatives in public safety, resource development, education and transportation.

He is continuing the 10-year initiative he announced in 2009 to reduce “epidemic” rates of domestic violence and sexual assault. Under the heading of the “Choose Respect” campaign, Parnell is proposing $15 million, including $3 million for prevention, $500,000 for shelters and services, and $2 million for child abuse prevention and treatment.

He proposed adding 15 Alaska State Troopers in the Railbelt, divided equally between Fairbanks, the Matanuska-Susitna Borough and the Kenai Peninsula, and village safety officers in 15 more communities that have no law enforcement presence. He also wants to add prosecutors and investigators in Bethel, Fairbanks and Juneau to pursue child sexual abuse cases and sex trafficking cases.

The budget proposes $531 million for state energy projects, including $95 million for field work toward a federal license for the Susitna-Watana Hydroelectric Project. A dam and other infrastructure earlier this year was estimated at $4.3 billion. Parnell said a milestone was reached Friday when a study plan was filed with the Federal Energy Regulatory Commission.

Parnell offered no change in the K-12 student base funding formula but proposed $25 million to help school districts deal with higher energy costs. He proposed $68 million for new schools for two southwest Alaska villages, Nightmute and Quinhagak, plus 12 major maintenance projects.

He included $50 million for natural gas pipeline development, split evenly between reimbursement for companies working on a major line under the Alaska Gasline Inducement Act and the Alaska Gasline Development Corp.

Parnell proposed more than $1 billion in road, airport and ferry spending, including $8.5 million for the Ambler Mining District road, $7 million for the Dalton Highway and $2 million for the Department of Transportation to identify corridors to timber and mineral deposits as part of the “Roads to Resources” program. He included $10 million for a fund for the Knik Arm bridge. The fund built up over time could eventually leverage 30-year tax-exempt financing for the proposed bridge between Anchorage and the Mat-Su Borough, he said.