Senators gear up for new session

A fairer distribution of funds for schools, paying off the looming public employee retirement debt and restoring state aid to municipalities will all be on the table when the Legislature convenes Jan. 9, say Alaska Senate members representing the Kenai Peninsula.

So will fixing roads and other infrastructure, addressing the controversy over proposed changes to mixing zone regulations and moving forward with a plan to build a natural gas pipeline.

But topping the list this year is what to do with the estimated $1.2 billion oil revenue surplus.

“It’s a tremendous responsibility,” said Senate Majority Leader Gary Stevens, R-Kodiak, whose district includes the lower peninsula. “It’s an enormous windfall. It’s incumbent upon us to make the best use of this opportunity.”

Another surplus is possible next year, assuming oil prices stay elevated, he said.

Sen. Tom Wagoner, R-Kenai, urged caution against over funding, saying there are probably more ways to spend the surplus than money to actually spend.

“The last thing I want to see is (surplus dollars) spent on something that grows government. I don’t want to see things go hog wild,” he said.

Thursday, Gov. Frank Murkowski outlined his proposed 2007 capital budget, which included plans to spend most of the expected surplus: $565 million to the newly created Public Education Fund, $400 million to a natural gas pipeline, and another $130 million for public safety, corrections and gas line preplanning expenses.

“I’m not sure I agree with all the governor’s plan,” Stevens said. “I do agree with the funding of education. That’s an excellent idea.”

But the governor’s proposal to appropriate $400 million as a down payment on $4 billion in state funds he thinks the state should invest in pipeline construction needs a lot more scrutiny, Stevens said.

“I’m not convinced it is the role of government to own a facility like that and take a chance with the people’s money like that,” Stevens said. “There are no guarantees. I’m a little hesitant to wager the public’s money on something the industry is not willing to do. But I have not made up my mind.”

In spending state money on the project, Alaska would become a part owner in the pipeline.

There are plenty of issues that need addressing in the next legislative session, whether with surplus oil revenues or “normal” general fund dollars. High on that list is fixing the area cost differential program by which the state distributes financial aid to school districts.

The Kenai Peninsula and Kodiak school districts have argued for years that the current system is inequitable and that they have been shortchanged. For instance, the Kenai Peninsula Borough, which includes some fully rural, isolated schools, is treated as a whole almost as if it were urban.

“I’m going to ask Sen. Fred Dyson to hold hearings on my bill to allow districts with rural areas not connected to roads to be funded at a different level than they currently are,” Wagoner said.

The area cost differential issue has been “a real tough one,” Stevens said. The problem will be finding a solution that doesn’t involve robbing Peter to pay Paul. Districts getting enough aren’t likely to give up any to supply those that have been shortchanged, no matter how good the arguments might be. That means just one thing. Spending on schools must go up.

“That’s right,” Stevens said, if you’re going to “make sure no one gets harmed.”

Another issue, Wagoner said, is the Kenai Court.

“We have the busiest docket of any court in the state,” he said. “We are probably one judge and a courtroom short of that needed to rationally handle the caseload.”

He said he would look at options, perhaps including an addition to the courthouse and another judge. That may cost more, but the state already is spending money bringing judges in to handle cases, he said.

A conundrum that reverberates on the Kenai Peninsula and Kodiak is the cost of public employee and teacher retirement systems, often called PERS/TRS. The state is facing a $6 billion retirement debt in the next 25 years.

“That will be a major statewide issue this session,” Wagoner said.

A bill passed last year, Senate Bill 141, will initiate a new retirement program for unvested teachers and public workers starting July 1. It will create a defined contribution system, rather than the defined benefit system in existence now. Wagoner said he expects pressure from unions and other sources to amend or repeal the law, but believes it is a better system.

“We have to take a look now at a long-term solution,” he said. “It is bothersome that we allowed ourselves to get into this situation.”

Stevens called the looming retirement debt “a big hole,” but sought to ease concerns of current employees that they will lose when the new program goes into effect.

“No rights will be taken away from anyone who is employed now,” he said.

Creating a program to ease future expense is one thing, but it doesn’t address the debt posed by the state’s obligations to current workers. Stevens said one source of funds might be the Amerada Hess money within the Alaska Permanent Fund account

“It should be considered,” he said, though he acknowledges there are hurdles to be overcome.

On another issue, Wagoner said he intends to hold hearings in the Senate Resources committee on proposed mixing zone regulation reforms that opponents have argued will permit pollution in salmon-bearing rivers and streams now off limits to discharges.

“I need to hear more from the state about their plans,” he said. “Mixing zones as allowed now seems to be working.”

The new regulations, he said, would make it easier for mining interests.

“But I’m not sure we need to make it easier on mines,” Wagoner said. “Making the permitting process easier, maybe, but not environmental regs. We should not let up on those.”

Stevens said he’d be paying close attention to finding ways to encourage the unincorporated areas of the state to form boroughs. However, he also said he is wary bills that would restrict the abilities of new boroughs to impose taxes.

A former professor with the University of Alaska, Stevens is particularly interested in the future of the state’s facilities of higher education. He said he believes the university system has reached a point where it needs to be more accountable.

Wagoner said he would be filing a bill to allow school secretaries to be trained to administer medical shots to students, something only trained nurses or doctors may now do. The reason: there aren’t enough nurses to cover all schools all the time. He said he expects a battle with nursing organizations and unions over the issue, but it is something being done in other states.

He also said he would introduce legislation to promote and aid infrastructure development in light of Agrium’s move to coal gasification as a source of feedstock for its fertilizer plant. Although Agrium won’t make a decision about the changeover until March, Wagoner thinks they’re headed that way.

If so, in a few years there will be a 255 megawatt power plant at the Agrium site that would produce far more power than the fertilizer plant would need. The excess would be sold to the Railbelt electrical grid. That, Wagoner said, is going to boost the need for a major southern intertie, one larger than has been discussed in the past.