Knowles signs budget, vetoes money for Juneau road

Posted: Sunday, July 02, 2000

JUNEAU (AP) -- Gov. Tony Knowles signed the state's budget bills into law Friday, claiming the Legislature had approved three-quarters of the added money he sought for children's programs and education.

Knowles used his line-item veto sparingly, eliminating only $1.5 million for continued study of a road from Juneau to Skagway. Knowles has rejected the road in favor of a plan for fast ferry service to the capital.

''It does not in any way reduce the total number of transportation dollars for Southeast Alaska,'' said Knowles, adding that the money would be better spent on a ferry system or other roads in the region. ''I believe that the Legislature turned their backs on the fast ferry system.''

The reaction drew a disappointed response from road advocates, who said it extinguished any hope of improving access to the capital.

''I guess I sort of half expected it, though I'm disappointed,'' said Rep. Bill Hudson, R-Juneau.

The study could have been used to extend the existing road and build a new ferry terminal to cut the water miles between Juneau and the rest of the road system, Hudson said.

The budget bills for the fiscal year that begins Saturday spend $2.22 billion from the state's general fund, about $72.5 million less than in fiscal 2000, according to the Office of Management and Budget. However, $37.2 million of that reduction comes from moving some self-supporting programs out of the general fund.

The total budget -- which includes federal funds and the Alaska Permanent Fund dividend -- increased $137.5 million to $6.97 billion.

Knowles -- a Democrat -- praised the budget as a departure from the Republican-controlled Legislature's budget-cutting policies in recent years.

''We are beginning an era of investment in Alaska's future rather than an allegiance to arbitrary budget numbers,'' Knowles said.

The capital budget bill spends almost $1.2 billion, mostly from federal highway funds. Knowles said the measure ''will produce one of the healthiest construction seasons in recent memory.''

However, lawmakers from both parties said this year's amicable budget discussions may not be repeated in the future.

''I think it's a little early for the governor to crow that future legislatures will no longer reduce spending,'' said retiring Senate Finance Committee Co-Chairman Sean Parnell, R-Anchorage.

A complex series of budgetary shifts and shuffles allowed lawmakers to increase spending in many areas -- including child protection, child care, school quality grants and the University of Alaska -- while still meeting the GOP majority's general fund reduction target of $30 million.

However, much of the money used in those shuffles came from short-term sources, such as an unexpected decrease in the amount of money required for the state's basic support of schools.

Maintaining the level of spending allowed by the budget maneuvers could require big transfusions of general fund money in future years.

''The people down there next year are going to have a real problem trying to put the budget together,'' said Rep. John Davies, D-Fairbanks, a minority member on the House Finance Committee. ''We're going to have a steep hill to climb next year in terms of general funds.''

Davies also expressed hope that the Legislature would turn away from the budget-cutting policies of the past five years, and pointed to increases for the University of Alaska as a good sign. The university got a $13.9 million increase in the operating budget, along with money for construction and maintenance in capital spending bills.

The budget debate was also smoothed by a sustained period of oil prices, Knowles said. Much of the state's general fund income comes from oil royalties and taxes, and the high price cut the amount of reserve cash needed to balance the current year's budget to $253.9 million, the Office of Management and Budget said.

That leaves about $2.9 billion in the Constitutional Budget Reserve. If current trends in oil future continue, the fiscal 2001 budget could be balanced with $117 million from the reserve, compared to the $373 million forecast by the Department of Revenue earlier this year.

Knowles also signed two other spending-related bills Friday:

--House Bill 287, appropriating $164 million for capital projects including schools, University of Alaska facilities and harbors. The money will come from the sale of bonds backed by Alaska's share of the a settlement between states and the tobacco industry and the income of the Alaska Housing Finance Corp. Because payments on the bonds won't begin immediately, the spending doesn't count in the new budget. Knowles criticized lawmakers for not dedicating more money to rural school construction and maintenance.

--Senate Bill 289, establishing a grant program for vocational and technical education programs through the University of Alaska, the Seward Skills Center and the Kotzebue Technical Center. Knowles praised the bill's intent, but said he was concerned because it uses money from the state's unemployment insurance trust fund, which might boost rates for employers in the future.

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