$40m from fund tap?

April 17, 2005

JOEL DAVIDSON/Frontiersman reporter

MAT-SU - Prospects of tapping nearly $345 million from the Alaska Permanent Fund Earnings Reserve Account without a popular vote have touched off a frenzy of radio call-ins, letters to newspapers and general debate among Alaskans.

Valley legislators remain divided over Senate Bill 155, sponsored by Sen. Ben Stevens, R-Anchorage, which would include funding for three new Mat-Su-area elementary schools and capital improvements to existing schools.

State senators approved the bill Wednesday with a 13-7 majority. The controversial legislation now goes to the House and, if approved there, on to Gov. Frank Murkowski.

In the past, Murkowski has said he opposed using the permanent fund without voter approval, but state legislators are unsure about how the governor will respond to SB 155.

To the surprise of some Valley residents, Sen. Lyda Green, R-District G, helped co-sponsor the bill that would bring more than $40 million to the Valley.

Despite major benefits for the Mat-Su, Green's support for the bill has caught some people off guard. In 1999, Green opposed a proposition that would allow the use of permanent fund investment earnings to help balance the state budget.

The 1999 proposition asked voters if a portion of the permanent fund investment earnings should be used to help balance the state budget, and voters overwhelmingly said no.

Now, with massive overcrowding in Mat-Su schools and the prospect of double-shifting some schools while using increasingly more portables, Green is the lone Valley legislator supporting SB 155 as a way to finance the sorely needed new schools. The rest of the Valley delegation, while acknowledging the bill undoubtedly benefits the Mat-Su, opposes tapping the permanent fund earnings without a popular vote.

Green's fellow Valley senator, Sen. Charlie Huggins, R-District H, said he supports the projects in SB 155 but can't support dipping into the permanent fund earnings.

"My constituents from Mat-Su to Chugiak decisively do not support spending Permanent Fund earnings," Huggins stated in an e-mail to the Frontiersman. "Over 70 percent said "No" in an extensive survey we conducted before SB 155 was filed."

But Green views the bill as a way to relieve strained schools without putting the Mat-Su Borough into a long-term bond debt. In a recent response to a Mat-Su Valley Frontiersman survey question, Green stated she supports SB 155 rather than bond-debt reimbursement.

"There are several reasons," Green wrote. "The cost of inflation gives today's dollar more purchase power than tomorrow's. A direct appropriation allows the Mat-Su Borough to build the schools more quickly and for less cost by cutting out the additional processes of an election and a bond issuance."

Green did not return several phone calls.

Rep. Carl Gatto, R-District 13, sees things differently. He said tapping the permanent fund earnings account is not his preferred option.

The first priority, he said, is to try and get his fellow legislators to pass bond-debt-reimbursement legislation that would include reimbursing the Mat-Su Borough 70 percent of the cost for three new elementary schools and a new high school.

The Mat-Su Borough School District has requested an $85-million bond package to pay for these projects. If the state does not reimburse the borough, Gatto said property taxes will rise.

"I'm concerned about the $85 million raising our property taxes by an extraordinary amount," Gatto said. "That would be a $300 property tax increase."

Mat-Su Chief School Administrator Bob Doyle said SB 155 is a solid investment in the Mat-Su and one that would greatly ease the burden on property-tax payers, while also helping fund new schools.

"To me it's a question of if you need roads, police, schools, it's up to legislators to decide how to fund them," Doyle said. "In our discussion with legislators, they recognize that the Mat-Su is growing."

Whether the funding comes from the permanent fund earnings account or through a bond package, Doyle said the bottom line is that schools need to be built and the district is open to both options or a combination thereof.

Currently, however, bond-debt reimbursement is moving slowly through the House, prompting school officials in the Mat-Su to think HB 13 may be a dead bill. Gatto still holds out hope for the legislation but admitted that if it does die, he might consider tapping the permanent fund earnings account as an alternative.

"I don't know yet," Gatto said Thursday. "The most important thing in SB 155 is the three free schools we get, and it would only be about $10 off our PFDs. At that level I would have to give it a strong consideration."

Gatto admitted, though, that he still doesn't know if the governor will approve SB 155 even if it did make it to his desk. If Murkowski vetoes the bill, it would take a three-fourths vote in both the Senate and the House to override it. Gatto said he doesn't think the votes are there to override a veto.

Any veto effort would certainly not get any support from those who say they believe in fiscal conservatism, like Rep. Vic Kohring, R-District 14.

"I strongly oppose Senate Bill 155," Kohring said Friday. "This is going to be the start of even more spending of the fund. It will set a precedent and it will be a greater temptation in the future."

Kohring said it is possible to fund school capital projects in other ways by cutting the state's operating budget.

"I would merge and consolidate agencies," he said. "By virtue of that we can eliminate a lot of upper-management positions and save millions."

Kohring listed a host of specific cuts, including shortening the legislative session from 120 days to 60 and moving the state capital to Anchorage to cut down on travel expenses.

"I really appreciate what my colleagues are trying to accomplish as far as trying to find money to build capital projects," Kohring said. "However, I disagree with the funding source."

Kohring said he would support bond debt reimbursement through HB 13 but said with only three and a half weeks left, time may be running out on the bill.

"It's in House Finance awaiting a hearing, but it still has a long way to go."

Contact Joel Davidson at 352-2266, or joel.davidson@frontiersman.com.