House reaches agreement on university, rural electric funding

Posted: Sunday, April 16, 2000

JUNEAU (AP) -- The state House solved two pieces of its adjournment puzzle Saturday by reaching agreement on a pair of high-profile issues -- more money for the University of Alaska, and a steady subsidy for rural electric rates.

Reversing a vote Wednesday, the House voted to tap $206 million from the state's budget-balancing Constitutional Budget Reserve to replace the university's $172 million general fund budget for the fiscal year that begins July 1.

The extra $34 million is intended for both fiscal year 2001 and fiscal year 2002 and fulfills a university request for a $16.9 annual increase.

The House also approved bills to endow a new Power Cost Equalization fund with $200 million, including $73 million from the sale of four state-owned hydroelectric projects and $100 million from the Constitutional Budget Reserve. The endowment fund is projected to generate at least $15.7 million annually, the cost of lowering electric rates in 193 Alaska villages that do not have access to cheaper power generated by natural gas, coal or hydroelectric projects.

Rep. Eldon Mulder said he could not overstate the importance of passing the bills.

''It's a significant step in the right direction toward a peaceful adjournment,'' said Mulder, R-Anchorage.

House Minority Leader Ethan Berkowitz was one of eight Democrats to change his vote on the university budget.

''We're in a different time of the session,'' said Berkowitz, D-Anchorage. ''I can see how the pieces are coming together.''

The bills passed after Mulder and House Speaker Brian Porter, R-Anchorage, met behind closed doors with all 13 Democratic minority members. Mulder described the meeting as a chance to lay out the majority's strategy for the end of the session.

Berkowitz agreed and characterized the discussion as receiving assurances, not horse trading. Since the vote Wednesday, he said, there has been progress by the conference committee considering the operating budget and the Senate's version of the capital budget has been unveiled. Also, Democrats have been assured that state employee contracts will receive fair consideration.

''We had more knowledge and we could make a better decision,'' Berkowitz said.

Minority lawmakers held sway over the university bill because tapping the budget reserve requires a three-quarters vote. Lawmakers normally draw from the CBR, now at $2.6 to fill be gap between state revenue and spending.

Mulder has championed the university budget increase since UA President Mark Hamilton convinced him that the state's system is crucial to the state's future as its economy diversifies.

Power cost equalization has been a top priority for rural legislators. Mulder said he and other urban lawmakers have been won over even though most of their constituents probably do not understand rural electric rates, which can be five times higher than in places with access to cheap power.

Mulder said if rural communities are ever to be self-supporting, they need affordable power.

The PCE program underwrites the first 500 kilowatts of power in Bush homes. The statewide average consumption is 700 kilowatt hours. The subsidy brings the rate down to about double the rate paid in Alaska cities.

The endowment relies on $73 million from the sale of hydroelectric projects in the Four Dam Pool. Power companies in Ketchikan, Wrangell, Petersburg, Kodiak, Valdez and Glennallen, will buy the four projects, fulfilling a longtime desire for local control.

Gov. Tony Knowles congratulated House members after the votes. He said approval of the PCE endowment was historic and supporting the university will help it become a topnotch job training center.

The bills now move to the Senate and could face opposition.

The Senate version of the operating budget calls for an $8.5 million increase for the university.

Mulder said he could not speculate on what will happen to the PCE bill and its endowment from the budget reserve.

''I don't have a vote in the Senate,'' he said.

Still to be resolved before adjournment are proposed labor contracts with 12 state employee unions. Pacts signed with the unions would increase state spending by more than $20 million.

Mulder said majority members had their first discussion of the contracts Saturday and members expressed concern about adding steps to employee pay schedules, increased health benefits, and the cashing out of sick leave. However, Mulder said an agreement on the contracts could be reached without a special session.

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