Parnell Vetoes $336-Million from Budgets

By Dave Donaldson

Governor Parnell today put the finishing touches on this year’s budgets by vetoing $336-million from next fiscal year’s operating and capital budgets.   He left untouched the rest of the thirteen Billion dollars in spending the legislature approved.

Most of the vetoes were made to the capital projects budget.  It had left the legislature spending three point two Billion dollars.   Parnell said the state is in the enviable position of having a surplus available now,   but he said there are warning signs that we will have to cut sometime.  And in talking to other governors from around the country,  he said the only way to avoid the financial troubles of other states is to target spending.

They have states in financial trouble in part because, when the times were good, they kind of took a Let the Good Times Roll mentality or attitude and overspent at that time.  And Alaska is going to take a different approach.   While times are good,  or while we have a surplus in this case, we are going to make targeted, smart investments. Both to take care of what we have as well as to build new infrastructure.

His response was to cut $300-million, mostly from increases the legislature added to what he proposed at the start of the session,  and mostly in a wide range of small projects spread out around the state.   He says he talked to fifty four of the sixty legislators about the projects in their districts before making his decisions on what would remain.

Parnell points to what he left in place – infrastructure such as highways and water projects, resource development, public safety, education and maintenance.  There were only two large statewide vetoes,  $25-million in grants for renewable energy projects and $22-million for a rail extension to Port McKenzie.

Anchorage Republican Mike Hawker, co-chair of the House Finance Committee noticed that the cuts were mostly in the form of reductions in spending – partial funding of projects instead of removing them completely.   He says that means supporters of those projects will be back.

The needs haven’t gone away – the needs for improved roads, the needs for improved water systems,  the needs for these community projects have not gone away,  but we are in that mode of deferring our spending.   This is the same challenge that government got itself into in the decade of the nineties.

At that time of low oil prices,  the legislature said it needed to make drastic cuts to its annual spending.   Hawker says the high budgets during the past few years have mainly been to catch up on the needs that were bypassed then.  And like the governor,  he says at some time, the economy will get tight again.

As the cycles go, we’re going to be very tempted to go into a mode that we don’t fund things immediately, but it will come home to rest when we have to pick up the pieces.

The Senate’s Finance Co-Chairman,  Bert Stedman of Sitka,  also says the needs will be back – most likely next year.  And while the cuts were substantial,  there was really no fiscal reason for them.

We have projected to have about twelve Billion in savings by the end of June – not counting the Permanent Fund – will be larger than this just on our savings.  So as we try to move the state forward, a lot of these projects need to come back on the table in the next appropriating cycle or the one thereafter and continue to get built.

The legislature could still call a special session to override the vetoes,   but Stedman says it would be difficult under the circumstances since about half of them are at the local level and there are not likely enough in any one place to justify such a move.


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