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Flush with oil money, Alaska pumps up spending growth
Anchorage Daily News


August 25, 2005

JUNEAU, Alaska - Alaska's state spending rate is swelling this year at more than twice the national average, based on reports from state and national analysts.

Figures from the Alaska Division of Legislative Finance show general fund spending growth of either 14.8 percent or 14.3 percent, depending on how the numbers are crunched.

Alaska legislators voted to spend more than $3 billion in general funds for this fiscal year, according to the division -- almost $400 million more than the state spent the previous year.

The increase comes with Republicans - many of whom talked in campaigns about controlling spending - in charge of the Legislature and the governor's mansion. It was made possible because the state is flooded with dollars from record-high oil prices.

Gov. Frank Murkowski proposed many of the expenditures, lawmakers approved them and the governor signed the final budget.

"We've had the chance to take care of some of the priorities that Alaskans expect will be addressed," said Murkowski spokeswoman Becky Hultberg.

Eagle River Republican Rep. Bill Stoltze, first elected to the House four years ago on a platform of less spending, said he is concerned about the trend in the opposite direction. But the Legislature was faced with rising Medicaid costs and the need for schools in his district and elsewhere, he said.

"You run into personal conflicts. You'd like to keep a better handle on it. Sometimes you get dealt cards that are tough to meet what your philosophical aspirations are," he said.

Anchorage Democratic Rep. Ethan Berkowitz, the House Minority Leader, said investments were needed in areas such as education. But he called some expenditures questionable and argued that better planning is needed to avoid boom-and-bust spending tied to volatile oil prices.

"If there is no fiscal plan, there is no fiscal discipline," Berkowitz said.

Nothing drives state spending like oil prices. More than 80 percent of the state general fund budget comes from the taxes and royalties the state makes from oil. Much of the spending came through the construction budget, which saw a drop in federal dollars but a $330 million increase in state general fund spending.

Wasilla Republican Sen. Lyda Green, in charge of the budget in the Senate, did not return a phone message for this story. Her staff said that Green was out of state.

Anchorage Republican Rep. Kevin Meyer, the architect of the House version of the construction budget, said the state was playing catch-up. Alaska was making budget cuts in the 1990s when other states were increasing spending, he said.

Meyer said there was a need to invest in areas like school maintenance and roads. Fortunately, he said, oil prices went through the roof and made it possible.

"We were lucky and blessed we had money to spend," Meyer said.

Like other lawmakers, he plans to start saving more money in the next session.

"I don't think any of us believe that oil prices are going to stay where they are at," he said. "We could be in for a pretty heavy fall if we don't put some away now."

The National Conference of State Legislatures found that, among the 46 states it surveyed, general fund spending is budgeted to grow an average of 5.7 percent this year.

It listed South Carolina's spending growth as the nation's highest at 14.7 percent.

Hultberg said the current level of Alaska spending needs to be taken in context.

"The governor held the line on spending for two years, and it was a tough process to do that," she said.

Murkowski has almost finished his third year in office. Legislative finance numbers show state general fund spending went down about $176 million after the governor's first year in office.

But spending rose by $327 million for the next year, after a school funding increase and big supplemental appropriations in areas like Medicaid, firefighting and work related to a natural gas pipeline. The upward trend continued in the budget for the current year.

"Alaska has weathered some very tough budget years over the past decades and needed to catch up," Hultberg said.


Distributed by Scripps-McClatchy Western Service,

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