Parnell Sends Legislature His Budget Plan for Next Year

Governor Parnell today presented his versions of the operating and capital projects budgets that the legislature will work on during next year’s session.

Speaking to the Anchorage Chamber of Commerce, he said lawmakers shouldn’t expect to spend more in their versions of the budgets than he approved when he signed the current budgets last spring.

Parnell says the new budgets reflect $600-million in spending cuts – and the elimination of 284 state jobs.    He says he won’t allow spending to spike just because there’s surplus money available.

With that lower starting point on dollars and positions, we can have a public conversation with the legislature about needs versus wants, about efficiencies and about more effective use of the public’s dollars.

The budget leaves a $3.7-Billion unspent surplus over projected Revenue.  Parnell says that needs to join the $13-Billion already in various state savings funds.    He calls for restraints against an uncertain future.

Oil production is declining, and oil prices can be volatile. The European debt crisis threatens not only Europe, but the United States potentially heading into recession in 2012.  And certainly our own federal fiscal situation and our $15-Trillion national debt is reason for concern.   Alaska on the other hand will lead in fiscal responsibility.   We do not set a lower starting point for our spending that we will overspend and create  worse … create more vulnerability for ourselves as a state down the road.

He says he’s holding the operating budget steady despite several sizeable, unavoidable increases,  such as  new state employee contracts, the planned opening of the new Goose Creek prison in the Matsu,  increased state contributions to cover Medicaid costs,  and the unfunded pension liability for state employees.

Like the Federal government has to deal with Social Security and Medicare as its elephant in the room,  our elephant in the room – financially – is this unfunded pension liability that we will deal with.

Meeting with reporters following his speech,  Parnell said one extra he is looking for is a $350-million package of projects to pay for improvements to ports in communities around the state.  $200-million of that will go to complete the renovation underway at the Port of Anchorage.   He explained that he wants to put the projects before the public to approve as General Obligation Bonds,  not to pay for them with cash.

Our savings accounts are making more money than the cost of financing this three hundred fifty million dollars.  So where we have to pay three percent on G.O. Bond financing but we’re making five percent, six percent, in some cases even more in some of our savings accounts, it makes sense to use this cheaper money and make more on our savings.   We’ll have that discussion with the legislature.

Other projects in the bond package include $110-million for a port in the Matsu Borough, and $10-million dollars each for work on the ports in Emmonak, Ketchikan and Seward.

House Minoriity Leader Beth Kerttula points out that the governor does not allow for any inflationary costs in his spending plan.  She says that will be especially difficult for schools since the governor’s budget amounts to a decrease in spending power for local districts.

The budget bills will be formally introduced at the start of the legislative session that begins January 17th.

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