JUNEAU (AP) -- A $300 million school and harbor bond bill won approval in the Senate Finance Committee on Monday but drew the immediate protest of Gov. Tony Knowles for not spending enough on rural schools.
In a letter to House and Senate leaders, Knowles blasted the committee's projects list as neither adequate nor fair because it only includes six rural schools and ignores the ranking of major maintenance projects made by the state Department of Education and Early Development.
''It is distressingly obvious that your proposals skip many critical maintenance needs, especially in rural Alaska,'' Knowles said.
That brought a sharp response by House Speaker Brian Porter, R-Anchorage, and the co-chairmen of the House Finance Committee, Reps. Eldon Mulder, R-Anchorage, and Gene Therriault, R-North Pole. In joint letter, the three Republicans said they did not get all the projects they wanted, either.
''The package needs the consensus of legislators representing all Alaskans, not just your approval,'' the three wrote.
Sen. John Torgerson, R-Kasilof, said the bill and the $300 million total represents what most legislators could agree on.
''It seemed to have the highest level of consensus around the building,'' Torgerson said.
Sen. Loren Leman, R-Anchorage, called the bill a compromise and said he would have preferred to see school and harbor spending limited to about $250 million.
''I think we've done a pretty fair job of bringing in a package that is reasonable,'' Leman said.
Knowles said the bill skips critical maintenance needs. The 20th project on the major maintenance list, a new waterline for a school in Takotna, is not on the list and students face both a lack of fresh water and the use of honey buckets without it.
Instead, Knowles said, the bill contains the 79th project on the list, $423,507 for new carpeting at schools in the Matanuska-Susitna Borough.
''There are many other egregious examples,'' Knowles said.
The bill is a hybrid of bond proposals that have circulated on both sides of the Capitol. A House version supported $300 million in projects by selling revenue bonds backed by the money generated annually by a tobacco litigation settlement. A Senate version proposed general obligation bonds, which require approval by voters.
The latest package avoids a referendum but commits only about 40 percent of the tobacco litigation revenue until the bonds are paid off in 15 years. Those revenue bonds would account for $93 million of the spending package.
Earnings from the Alaska Housing Finance Corp. would add $76 million. The rest, $133 million, is expected to be generated from interest off of a new account within the Constitutional Budget Reserve.
Legislation passed by the House Finance Committee would set up an aggressively managed $400 million account within the $2.6 billion CBR, the savings account that fills the gap between spending and petroleum revenue. The interest could be used to reimburse communities for school bonds and municipal harbor bonds.
The legislation calls on Department of Revenue investors to manage the subaccount for a higher return. Revenue's chief investment officer, John Jenks, told the House Finance Committee meeting that such a policy would call for a portfolio of 60 percent stocks and 40 percent bonds held for five years.
Sen. Randy Phillips, R-Eagle River, voted against approving the bonds bill. He said the measure was being rushed through the committee process and comes on top of the billion-dollar capital projects bill, covering transportation, water and sewer and other projects.
The bill makes spending decisions, Phillips said, that rightfully should go to the voters.
But Torgerson said the bill includes $133 million for projects already approved by voters when they backed new schools and harbors in their municipalities. The state will pay 70 percent of those costs. Rural school projects are in line for $93 million and the University of Alaska for $76 million.
Sen. Dave Donley, R-Anchorage, also voted against the bill. The committee rejected Donley's amendment to add $88 million in state road projects that had appeared in a previous bill.
The committee also rejected an amendment by Sen. Al Adams, D-Kotzebue, to pay for 10 new rural schools.
Adams voted in favor of the bill but said money for the schools and harbors should have come directly from the Constitutional Budget Reserve.
''You're saving yourself $60 million over time,'' Adams said. ''I'd like to spend that $60 million on deferred maintenance.''
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