Amid budget struggle, Alaska has little money for new construction or renovation

The Alaska House of Representatives, following in the path of the state Senate, has approved a small construction and renovation budget for the fiscal year that starts July 1.

The vote on Senate Bill 57, the annual infrastructure bill — formally known as the capital budget — was 21-19, along caucus lines.

When oil prices and production are high, the Alaska Legislature pours hundreds of millions of dollars into new construction and maintenance projects. This spring, with the Legislature anticipating low oil prices and reduced federal funding, the House version of the capital budget proposes to spend just $167.9 million in general-purpose dollars. 

In comparison, the capital budget two years ago spent more than three-quarters of a billion dollars. The newly approved capital budget isn’t the smallest in recent history — in 2016, legislators approved just $107 million — but spending is very limited by historical standards, noted Rep. Calvin Schrage, I-Anchorage, who oversaw the budget on the House Finance Committee.

“This was not a fun or easy year to be the capital budget co-chair,” Schrage said, “due to our state’s dire fiscal picture. We had to say no — or at least not now — to a lot of good projects that would have benefited Alaskans. That said, we were still able to make some meaningful investments.”

A significant amount of the capital budget is being set aside for matching funds needed to unlock federal grants. For example, it allocates $57.2 million in general-purpose money to the Alaska Department of Transportation and Public Facilities, which gives the state access to over $2 billion in transportation funding once federal money is considered.

It isn’t yet clear how federal budget cuts will affect that figure. The budget is set based on what is known as of today.

With general-purpose revenue limited, the House and Senate finance committees were mostly limited to assigning money to deferred maintenance projects at state facilities spread across Alaska.

For example, the Senate added $19 million to the major maintenance list at public schools. The House added another $19 million on top of that, enough to cover the top nine projects on the list..

“We basically had an agreement going in; we got half, they got half,” said Sen. Bert Stedman, R-Sitka and Senate Finance Committee co-chair.

When it came to discretionary funding, requests from individual legislators for things like playgrounds or streetlights, the House and Senate were again treated equally.

“Everybody got nothing,” Stedman said.

Budget documents show few exceptions to Stedman’s comment. 

One of the few budget additions made by the House was $500,000 for a Blood Bank of Alaska testing lab. Gov. Mike Dunleavy requested the money, the Senate rejected it, but the House added it back in.

In many places, the budget attempted to use other sources of money instead of general-purpose dollars that primarily come from Permanent Fund earnings, oil taxes and royalties.

For example, Dunleavy requested $7 million for a time and attendance system to be used by state employees. The Senate cut that request to $4 million, and instead of using general-purpose dollars, lawmakers took additional money from the accounts of the Alaska Industrial Development and Export Authority. The House approved that change.

Of the budget overall, Schrage said lawmakers tried to deny projects equally, without regard to party or district.

“I know that this won’t make everyone happy, but we’ve done the best that we can,” he said.

The budget will return to the Senate for a concurrence vote, then advance to Dunleavy, who has line-item veto power and may eliminate individual budget items but cannot add new ones.