Deal on power subsidy, budget votes greases rails to adjournment

Posted: Thursday, May 04, 2000

JUNEAU (AP) -- As the Legislature neared adjournment, majority Republicans agreed to endow a fund to subsidize rural electric rates well into the future. In return, some minority Democrats voted for spending bills that don't pay for all their priorities. That exchange was part of a complex deal that ended the Legislature's regular session Wednesday. Here's a look at the major pieces of that agreement:

Rural Power

The House and Senate have both approved a plan to sell four state-owned hydroelectric plants and set up an endowment to pay electrical subsidies in the Bush.

Finding a long-term source of money for the program was a high priority for rural lawmakers, who wanted to eliminate yearly fights about paying the subsidy.

The $73 million sale of the Four Dam Pool generated little controversy except for complaints over a rider attached by Sen. Rick Halford to facilitate the sale of the Matanuska Telephone Association.

The toughest part of the plan was finding enough votes in the Republican-dominated Senate to tap the state's cash reserve for another $100 million to make the fund big enough to earn the $15.7 million a year to subsidize electric rates in 193 villages. Tapping the reserve takes a three-quarters majority in both the House and the Senate.

The House approved the money last month, but the Senate held out until Tuesday, using the money as leverage to win minority votes on other issues, including:

School Bonds

A bond package includes about $198 million for school construction and repair, including about $112 million for rural districts.

That's much smaller than the $510 million package proposed in January by Gov. Tony Knowles, which was aimed at clearing a backlog of rural projects. That backlog prompted a pending lawsuit accusing the Legislature of violating the state constitution and federal civil rights law by neglecting schools in predominantly Native areas.

The Legislature's package pays for six rural schools near the top of the Department of Education and Early Development's priority list. Other rural schools were bypassed to provide money for projects in the urban districts of the Legislature's Republican majority.

Minority Democrats and Knowles protested jumping down that list, and it's unclear the bond package will ward off the lawsuit. But those complaints weren't enough to derail the larger agreement.

The bond package also includes $61.8 million in projects for various University of Alaska projects, potent sweeteners for Democrats from Anchorage, Fairbanks and Juneau.

The deal was further sweetened by projects included in:

The Capital Budget

The capital budget spends about $1.08 billion, including $824 million in federal money and $73 million from the state's general fund.

Nearly three-fourths of the money, $750 million, is directed to road, harbor and airport projects around the state.

Another $81 million is destined for water, sewer and sanitation projects.

The agreement on the omnibus spending bill followed this year's unusually amicable debate on:

The Operating Budget

A House-Senate compromise on the operating budget spends $2.17 billion from the state's general funds, $22.7 million less than the current year. Combined with the capital budget, Republican leaders say that meets the majority's goal to reduce general fund spending by more than $30 million.

But much of that cut came from a $16 million decrease in the amount of money required to pay the state's basic support for school districts. The budget also uses a variety of switches and shifts to offset cuts and help pay for increases to the University of Alaska, child care grants and other children's programs.

However, neither the capital budget nor the operating budget include money to pay for:

New State Contracts

Part of the session-ending deal was an immediate special session on agreements negotiated between 12 state employee unions and the Knowles administration.

Along with similar increases for nonunion state workers and separate deals for University of Alaska employees, the contracts would require an additional $18 million from the state's general funds. That would reverse most of the $30 million reduction.

Majority Republicans, especially in the Senate, contend the wage and benefit increases are too generous.

Adjourning without approving the contracts forces Knowles to call lawmakers back and allows them to blame any increase they eventually approve on the administration.

Administration officials had threatened to delay the special session until the Senate came forward with enough votes for the contracts, which might have forced a strike and a government shutdown.

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