Parnell spares budget vetoes, signs SB21

Gov. Sean Parnell left the Legislature’s budget largely intact when he signed off on $6.8 billion in general fund spending for the 2014 fiscal year.

That’s the state’s spending as part of a $13.5 billion total budget, which includes federal dollars and Alaska Permanent Fund Dividends.

The 2014 fiscal year starts July 1.

Parnell announced his final budget May 21 after also signing legislation to change oil taxes and authorize the Alaska Gasline Development Corp.’s efforts to create a natural gas pipeline from the North Slope.

The total represents a $1.1 billion, or 14 percent, reduction in state general fund spending compared to the current fiscal year.

Parnell vetoed just $2.1 million from the budgets, much of which came from calculation errors in the prior version.

From the capital budget, Parnell vetoed the Kotzebue harbor project that would have funded a road to the potential harbor site.

Parnell said the money was intended for facilities and maintenance projects, and he wanted to retain that focus. In Southeast Alaska, Parnell also took language out of the budget that would have transferred funding from a Hoonah project to the Sitka pool.

Parnell also vetoed $700,000 for litigation expenses associated with the Ruth Burnett Sport Fish Hatchery in Fairbanks. That’s because the issue is expected to get resolved without the additional expenses, he said.

Last year, Parnell vetoed $66.6 million in spending.

Parnell said no additional cuts were made because the Legislature exercised fiscal restraint in drafting the budget.

“The Legislature joined me in meeting the first year’s spending reduction target,” Parnell said.

Prior to the start of the session, Parnell had asked the Legislature to cut $1.1 billion and keep spending to $6.8 billion.

The five-year plan calls for restraint in future budgets, as well, although the Legislature could spend money on a major project of statewide benefit outside of his caps, Parnell said. A gas pipeline would qualify for funding not counted toward the containment, he said.

Despite the cuts overall, the budget offers added funding for certain projects.

The Susitna-Watana Hydro Project received $95.2 million to continue studying the proposed dam; the Interior energy plan was funded to start natural gas trucking from the North Slope to Fairbanks; and power cost equalization was funded in full, Parnell said.

The Susitna-Watana money will fund some fisheries research, and the Legislature also agreed to fund part of Parnell’s chinook salmon initiative, and other fisheries projects.

The Alaska State Troopers will receive 16 additional positions, which include a new trooper post in Hooper Bay and several positions in the Matanuska-Susitna Borough, Fairbanks and Kenai. There also is a support position for Village Public Safety Officers and five VSPOs added.

Parnell said the education budget also included increases, which will go toward transportation, school energy costs, and safety and security upgrades. There was also nearly $100 million for construction and maintenance at several schools.

Parnell said May 21 that he hoped the Legislature would continue to hold spending down in future years, and that the five-year fiscal plan was based on embedding lower spending and limiting how much the state draws on its reserves.

Overall he was “extremely confident” that the budget restraint will continue for the next five years, he said.

Molly Dischner is a reporter at the Alaska Journal of Commerce.