Legislature turns to budget in waning days of the session

JUNEAU -- Legislative leaders are trying to come to terms on state spending plans, including a $2.9 billion capital budget that members of the GOP-led House worry is too big and leaves them little or no room to add projects of their own.

House Speaker Mike Chenault said the chamber will also have relatively little time to review the plan and hold hearings. But he said he didn't anticipate either the bill going into conference committee or lawmakers staying past their scheduled adjournment date Sunday.

But "you know, I'd sure hate to vote on a $3-billion bill and not know what's in it," Chenault said.

The Senate Finance Committee has yet to pass the bill out of committee. Once it does, the full Senate will vote on it. It will then go to the House Finance Committee, the first and last stop before a bill hits the House floor.

Senate Finance Committee co-chair Bert Stedman said the House has had access to the proposed budget since its release Monday, allowing time for members to begin their analysis. "They're working on it as we speak," he said Tuesday.

The Senate's proposal includes major investments in statewide energy and school construction projects, as well as $500 million that would be put in savings.

Roughly $465 million in energy projects, including $65.7 million the governor wanted to advance a hydro dam idea, was meant to be part of a package -- all or none. It's also meant to begin implementing in earnest Alaska's energy policy, Stedman said.

Gov. Sean Parnell has set a $2.8 million spending cap. That, however, was contingent upon the Legislature passing a bill to address oil production taxes before Sunday's scheduled adjournment. He has threatened to cut capital projects if a bill stalls, which it now appears certain to do. The proposed budget includes contingency language of its own, including provisions tying $100 million worth of the governor's projects to the price of oil and taking an all-or-nothing approach to energy projects.

Parnell's budget director, Karen Rehfeld, called these pieces "troubling," and said the Department of Law was asked to review the matter. She said she believes they constitute a separation-of-powers issue and violate the governor's right to use the line-item veto.

Stedman said the Legislature's attorneys indicated no separation-of-powers issues with using contingency language and noted the Legislature is the appropriating body. He said if the oil trigger isn't met, the Legislature can lower it next year so the projects could get funding.

The director of legislative legal services declined to comment.

Stedman said he expects the budget to grow to about $3.1 billion once the House is finished, an amount he considers reasonable. The state has billions of dollars in savings, and the Senate is proposing adding another $1.5 billion to reserve funds.

But Chenault said members of the Republican-led majority are worried about the current size of capital plans and where money is being spent. For example, he said, on the energy package and proposal to clear the backlog of K-12 maintenance projects, some members think it's a "pretty big bite to take at one time."

He also raised concerns with the contingency language, which he said he doesn't remember seeing during his time in the Legislature, and with lack of projects in some districts.

Chenault said he's worried that if the House adds to the budget and Parnell makes cuts, Alaskans will say: "Hey, look at the Legislature. They bulked it up again; the House and the Senate bulked it up again, and the governor came to our rescue and vetoed some."

"When in all reality," Chenault added, "the House has a smaller say in what size that overall budget is."

Parnell proposes a budget and the Senate takes the first crack at it. The House, Chenault said, "is left with the scraps."

He said there's normally an agreement that the House won't cut items included by the Senate. There's no such agreement yet this year, he said. "We're talking."

Talks are also under way on the operating budget. House and Senate negotiators could meet as early as Wednesday to begin ironing out differences in their versions of the spending plan.

Rep. Bill Thomas, R-Haines, and chair of the conference committee, said there has been a productive dialogue between the chambers. The Senate's proposal is about $12 million higher than House's. Thomas said money for permitting and to begin preliminary operations of a new prison are caucus priorities. Senators have raised concerns with the cost of the prison and called for an audit.

House Republicans also questioned the nearly $500 million classified by the Senate as savings in a spending plan, including $400 million for an energy assistance program endowment and $60 million for a ferry replacement fund.

Chenault said the House isn't looking to put that money on the table to spend. Rather, he said it's worth discussing whether it is the appropriate way to characterize the funds -- and the best use for them.

He said he has thoughts about putting money toward an instate natural gas pipeline project, and Parnell wants a $400-million set aside to serve as an endowment for his merit scholarship plan.

"Are any one of these ideas right? I don't know," Chenault said. "But they're ideas people at least want to hear."