[Editor's note: Alan Austerman is majority leader of the Alaska House of Representatives. The following commentary was posted to his legislative website on June 13, 2011.]
A lot of people in the state right now are standing with breath held, waiting to see what kind of vetoes Governor Parnell will make before signing this year's capital budget into law. The governor has until July 1 to scrutinize the bill and decide on his cuts.
The capital budget was obviously an extremely controversial and political hot potato this year. But now that we're down to the point, it's interesting to take a look at some of the items that went in in the final days, and to wonder about how Gov. Parnell might want to wield his veto pen. Early in the legislative session, and then again more recently, he signaled that he liked the number "$2.8 billion" for a capital budget number. It's a relatively arbitrary number, but once you've flown your flag, people notice when you take it down.
The final capital budget was for $3.23 billion, or about a $400 million difference from the governor's preferred number. Governor Parnell isn't likely to cut $400 million out of the budget by slashing small items, like $50,000 for some project design work, or $30,000 for some new heavy machinery in a village. In general, Alaska governors have honored legislative intent for these smaller projects, recognizing that legislators are closer to the needs of their communities than the governor and his budget analysts can be.
That's not a golden rule, though, as Governor Palin showed in her FY2009 budget vetoes. She went in with her pen and slashed liberally, wiping out relatively small projects in a manner that left many in the legislature scratching their heads and some crying foul. Though she's long gone, her approach that year is in fact the root of much of this year's budget flim-flam, as Senate Finance Co-Chair Bert Stedman, whose district was particularly hard hit during the Palin slasher episode, has searched since then to find ways to assert legislative appropriation prerogative. The "poison pill" language that got this year's legislature into special session was an attempt to find a way to safeguard projects from veto. However, the House found the Senate's approach to be overreaching and to set a scary precedent for the future. The result of that deadlock was the special session.
But back to this year's budget items, and looking where the governor might cut:
When the House considers the budget (after the Senate gets done with it) it traditionally adds small district projects that pack an important punch for community needs and service. In District 36 this year that included funding for items like a home meal delivery van for the Kodiak Senior Center and a burn unit for the Iguigig Landfill. (See an older post comparing draft House and Senate budgets to see the House adds for our district.) All in all, these additions are compact (just about $1 million for 21 projects in our district this year). To trim $400 million the governor would have to cut all these for every district … plus about $360 million more.
We made several, much more significant changes to the budget, though, and these are the ones where an educated guess could point you. Further, past actions can act as a good indicator as future behavior. Looking through this lens, there are a handful of items that may be under a lot more scrutiny. Unfortunately, these are also some of the most meaningful additions that the House (and the Senate) made. They are:
- $100 million in home energy rebate and weatherization moneyThe governor, in his budget, requested $26.5 million for the weatherization program and no money at all for the home energy rebate program. The Senate added another $75 million, and the House added $25 million on top of that. These programs have been some of the most successful investments of state dollars in recent memory. They pack a quintuple punch by 1) saving money for consumers on reduced costs for energy needs in their homes, 2) creating jobsa LOT of jobsdoing the renovations and improvements on peoples homes, 3) driving conservation that reduces the overall need for energy production in Alaska, slowing the need to build more expensive power generation projects, 4) creating environmental benefits through reduced green house gas emissions, and 5) driving tag-along economic activity, as homeowners tend to spend more than just the dollars the get in their rebates.
- $34.7 million toward a Tax Revenue Management SystemThis is another big ticket item, and one the governor might be looking at. Unfortunately, its also really important. A recent audit turned up the fact that the governors Department of Revenue, which handles oil and gas taxes, is using such antiquated technology that theyre still doing a lot of data entry for our enormous oil & gas tax system (those taxes that fund 90% of state government) by hand. The same audit said that the labor involved with processing our tax data is so time-consuming that it is taking away from the agencys ability to do tax audits with the result that we still dont have a completed audit from any year under the ACES tax system. The legislature thinks its time to move into the modern era.
- $1.5 million in additional funds to the Municipal Harbor Facility Grant Fund, and $900,000 added to the Harbors Deferred Maintenance fund. Municipalities around the state that have taken ownership of their harbor facilities from the state rely on those facilities to support coastal economies, and a state grant fund helps them pay for larger infrastructure projects. That fund is chronically underfunded, and the list of needs grows and grows. The governor had $5 million in his budget for the program, but the legislature added another $1.5 million. Similarly, they boosted his $600,000 for the deferred maintenance pool for state-owned harbors to $1.5 million, from the $600,000 hed asked for. In coastal communities we understand how critical these dollars can be. Unfortunately, last years vetoes may give us a flavor of whats to come: he vetoed $5 million from the Municipal Harbor Facility Grant Fund last year. So well see what happens there.
- $22.7 million to support ongoing in-state gas work. The Alaska Gasline Development Corporation is working on possible in-state gasline work. Whether you support or oppose in-state gas, this money supports good decision making. This bumps up the governors budgeted amount, which was only $5.5 million. (The total appropriation, in two sections, is now for $28.2 million.)
- $200 million for a gasline fund. The budget also tags $200 million from the general fund to be moved into a future in-state gasline fund if one is created next year by the legislature. This money is not spent in this budgetjust tapped for transfer to another account where it is less likely to be spent by the legislature. Still, it shows up on paper as general fund spending and could definitely be vetoed.
- $400 million for the governors proposed Performance Scholarships. Though Governor Parnell was not able to get his legislation passed to establish a new performance scholarship fund, the legislature set aside money for it in the budget all the same. If the governor can marshal a successful program through the legislative process next year, the money is ready to get it going. This was one of the governors priorities in the 2011 session, and the legislature included this money in the budget in the final days in response to his requests. Of course, its very unlikely that the governor will veto his own priority funding, but it is worth noting as one of the major additions made to the capital budget in the last efforts to conclude the special session, and one that drove the budget up significantly.
This list isn't comprehensive, by any means. But it gives a sampling of the kinds of major ticket projects that are in the capital budget and likely to come under scrutiny. A full accounting of the capital budget money–split out by House District–is available on the Legislative Finance Division website. The report is a bit confusing, as it shows money in the columns based on the section of the bill where it appears, but the total numbers in the far right column are the important ones. Furthermore, a report comparing the governor's budget to the Senate's version and then to the House version (the final bill) is available here. Column 1 shows the governor's budget, column 2 the Senate, and column 3 the final bill. These reports can be tough to read, but a budget wonk will find lots of information in them. Don't hesitate to call if anyone in our office can help you wrap your arms around the information.
Alan Austerman is a member of the Alaska House of Representatives and serves the 27th Legislature as House majority leader. A Republican, he represents House District 36, which includes the communities on Kodiak Island and those in the Lake Clark/Iliamna region of the Alaska Peninsula.
The views expressed here are the writer's own and are not necessarily endorsed by Alaska Dispatch. Alaska Dispatch welcomes a broad range of viewpoints. To submit a piece for consideration, e-mail commentary(at)alaskadispatch.com.