State construction budget pieces fall into place

Posted: Sunday, April 29, 2001

JUNEAU (AP) -- A capital projects bill released by the Senate Finance Committee proposes spending $1.3 billion, heavily backed by money made available by the federal government, for construction projects in Alaska next year.

The capital budget includes $939 million in federal money, state general funding spending of $100.7 million, and $295 million from other sources including Alaska communities and revenue-generating agencies such as the Alaska Housing Finance Corp.

Senate Finance Committee Co-chairman Pete Kelly, R-Fairbanks, said the document proposes spending about $20 million more in state money than last year.

''We were able to address some pretty glaring needs in all the regions of the state,'' he said.

The lion's share of the money -- $906 million -- is directed to the Department of Transportation and Public Facilities for roads, airports, ferries and other projects.

The capital projects bill is the major piece of the construction budget but not the only one.

House Bill 191, up for consideration Saturday before the House, contains another $381 million for transportation projects backed by Grant Anticipated Revenue Vehicle, or GARVEE bonds. These bonds -- backed by future federal transportation grant money -- are sold to build more roads, ferries and airports. The federal government pays 90 percent of the bonds.

Also on the House floor Saturday is House Bill 234, which finances school, University of Alaska, port and harbor projects by selling bonds backed by a tobacco litigation settlement. The bill contains $67.8 million for schools, $24.5 million for the university, and $35.2 million for ports and harbors.

Gov. Tony Knowles' budget director, Annalee McConnell, said the administration is generally pleased with the capital budget.

''Overall, there are many good things in this,'' McConnell said, including full funding for Power Cost Equalization, the program that underwrites expensive electricity rates in rural Alaska.

Kelly said budget writers cut back some of the governor's projects and added others, including youth detention facilities in Fairbanks and Kenai.

''That's something I've always been interested in -- youth programs for kids at risk,'' he said.

Budget writers paid close attention to projects in which communities were willing to match state money, Kelly said, but mostly addressed needs listed by legislators. He said general fund spending could reach $110 million after deliberations that began Friday night.

''I wouldn't describe this as a porky budget at all,'' he said.

McConnell said the governor will urge more spending for state building maintenance. She said the governor's minimal amounts for repairing prisons, health clinics and other state buildings were reduced.

''Those have been whacked back pretty much in all departments,'' McConnell said.

Legislators rejected GARVEE bonds last year. Knowles put forth the idea again this year and the House came out with its own version that contains 85-90 percent of the governor's projects, said Department of Transportation spokesman Dennis Poshard.

GARVEE projects add bonding expense to the cost of construction but may save state money in the long run. Poshard said transportation projects are built before inflation boosts costs, and the public receives the benefits of the project sooner. Also, money generated by the sale of the bonds can be banked. The state is allowed to use that interest to pay its 10 percent share of the bond payments, saving general fund money, Poshard said.

In the tobacco fund bill, both Knowles and Democrats in the Legislature want to see more school projects.

The bill includes money for two new rural schools and 14 major maintenance projects from the Department of Education and Early Development's ranked list of needs. Knowles wanted four new schools and 46 major maintenance projects.

''We support a big chunk of schools this year,'' said Senate Minority Leader Johnny Ellis, D-Anchorage, especially in light of a judge's opinion that the Legislature violates the state constitution and federal civil rights law by discriminating against rural schools.

Republicans on the House Finance Committee refused to add school projects Thursday night. Co-chairman Eldon Mulder, R-Anchorage, said schools must be balanced with other needs.

''I think this bill does it in a reasonable and responsible way,'' he said.

McConnell said the administration hopes to see two other projects addressed in separate bills: a Department of Environmental Conservation food safety laboratory and a replacement for the Alaska Psychiatric Institute.

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