Local lawmakers eye Palin's proposals

Posted: Tuesday, December 11, 2007

Gov. Sarah Palin's recent calls for saving $7.1 billion in oil-revenue surpluses over the next couple of years and pushing education spending to more than $1 billion a year for three years are getting mostly favorable reviews from Kenai Peninsula lawmakers.

Those and other spending targets offered by the governor are considered possible because of record-high oil prices.

Reps. Mike Chenault, R-Nikiski, Kurt Olson, R-Soldotna, and Paul Seaton, R-Homer, say Palin has hit the bull's eye with some proposals, but may have missed with others.

On Wednesday, Palin proposed her savings plan, which included investing $2.6 billion in the state's Public Education Fund and setting aside $450 million to pay down future debt in the Teachers Retirement System. She detailed those and other ideas for the education budget two days later when she announced a scheme devoting more than $1 billion-a-year over three years to schools, including forward funding education and boosting the base student allocation.

In formally announcing the education plan, Palin took a lead from the Legislature's Education Funding Task Force and reaffirmed her own dedication to school funding.

Committing $1 billion a year for three years was critical, she said, "to shift the annual debate from how much are we going to spend on education to how we can be innovative and work to improve the outcome of our education system."

The education plan would increase the base student allocation by $200 per student, increase funding for intensive needs students, phase-in increases to district cost factors, and recalibrate pupil transportation grants to reflect conditions across the state.

Other parts of the $7.1 billion savings plan included moving $2.4 billion from the permanent fund's earnings reserve to the funds principal, a $1 billion set-aside to provide a stream of funds (from earnings) for transportation infrastructure, $379 million to replenish the Constitutional Budget Reserve account, and $250 million that could be distributed to worthy alternative energy projects.

Those are generally good ideas, said Chenault, co-chair of the House Finance Committee.

"I'd like the $2.6 billion in education funding to get to forward funding," he said. "That's been a goal of mine since I've been in Juneau."

Paying down some of the state's unfunded liability in the teachers retirement plan also makes sense, Chenault said.

So does setting aside some money for alternative energy ideas, though he urged caution with that one. He said he doesn't want to see sums give away in grants to plans that don't pan out.

He also said he likes the idea of setting up a transportation project fund, noting that there were projects on the peninsula that might benefit, but adding that it, too, would be a program demanding caution.

The governor's request to shift $2.4 billion from the earnings reserve account to the permanent fund's principal might be worth considering, but Chenault said he wasn't ready to commit his vote. Lawmakers are very unlikely to try to tap the earnings reserves, it being seen as a fund of last resort, he said.

"In my mind, it is safe where it is at," he said.

Seaton also likes some of Palin's ideas, especially with regard to forward funding education. Seaton was a member of the education task force.

"Seeing that in there was really good," he said.

As for her other priorities, Seaton said some figures might have to be "juggled around," and that the Legislature would have to see what specific amounts could be applied to each.

One thing he would like to see is a separate source of money established to fund community revenue sharing.

"During the Murkowski administration, that was the first thing to go," he said.

Pulling the plug on revenue sharing just when municipal governments were struggling with rising costs was the worst timing possible, Seaton said.

On proposal that does not yet get Seaton's support is moving $2.6 billion from the earnings reserve to the permanent fund's principal. He might change his mind, he said, if that money could be made to spin off community dividends.

Regarding Palin's idea for putting $379 million in the Constitutional Budget Reserve, Seaton said he's less concerned about that because unallocated funds left at the end of each budget cycle end up there anyway.

That's less important, he said, "than making sure we are fiscally responsible and don't overspend."

He favors using money meeting the Teacher Retirement System debt obligations.

Reached late Monday afternoon, Olson agreed that much of what Palin has suggested has merit. However, he thinks the most important place to put "significant money" first is into the Constitutional Budget Reserve and into debt owed to the Teacher Retirement System and the Public Employees Retirement System.

"We owe the CBR about $4 billion and we owe the PERS/TRS funds an excruciating amount about $10 billion," he said, adding he would put $1 billion to $2 billion toward the retirement debt.

"The only times we can make significant payments on those two programs are when we have money," he said.

Hal Spence can be reached at hspence@ptialaska.net.

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