Tuesday, April 13, 2010

Alaska State Legislature Spending Money Like Drunken Sailors; Proposed $2.8 Billion Capital Budget Could Grow

The Alaska State Legislature appears to be embarked upon a nonstop spending spree in which the sky's the limit. According to the Anchorage Daily News, the House plans to add even more projects to the $2.8 billion construction and maintenance package passed by the State Senate. The Senate's package also includes a new crime lab in Anchorage, and it has generated some surprising controversy, although the proposed crime lab, the first in Alaska, could be used by any law enforcement agency in the state.

Meanwhile, the House unanimously voted on Monday April 12th to ask voters to authorize nearly $400 million in bond debt. That would fund projects including a new sports complex at the University of Alaska-Anchorage, a life sciences facility at the University of Alaska-Fairbanks, and rural schools.

Although the House Finance Committee could make cuts to the Senate's package, House Speaker Mike Chenault (R-Nikiski) actually expects the Senate's package to grow. "In the economic times that we're living in, we're concerned about jobs for Alaskans and how do we keep them working through these times. And this is one way that we're able to do that and try to get Alaskans through those times," said Chenault.

The Anchorage Daily News Alaska Politics blog provides a link to the proposed capital budget, 143 pages at last count, via this portal. Public commenters have already identified considerable pork, to include a $50,000 appropriation to the Sons of Norway Lodge 23 for lodge renovation. And bipartisan opposition exists: Republican Governor Sean Parnell said he's trying to get the House to fight the Senate spending. "State Senate has gone on a spending spree ... they're above spending levels two years ago when we had $140 per barrel oil. With oil closer to $80 per barrel, they should spend less!" Parnell wrote. But Parnell is also an enthusiastic proponent of the proposed $76 million Anchorage crime lab; critics don't challenge the lab itself, but rather the size, scope, and cost. There is also Democratic concern about the size of the budget. Rep. Harry Crawford (D-Anchorage) said the size of the budget worries him. "There's a lot of good stuff being built, I'm not so sure that I want to do it all at once," Crawford said.

The state legislature is undoubtedly capitalizing on the temporary windfall triggered by ACES tax revenue. But the Anchorage Daily Planet cautions against this approach, reminding us that it will be a decade or more before any gas can flow in a large-diameter pipeline that may not even be built, and throughput in the trans-Alaska oil pipeline is drying to a dribble at around six percent a year. That pipeline is running about two-thirds empty already, and that oil pays for 90 cents of every dollar spent by the state. Furthermore, tourism and fisheries are both down, and the Pebble Mine remains a pipe dream. Dermot Cole of the News-Miner also takes issue with the proposed budget, decrying the secrecy and lack of public hearings for many of the items.

Yet on the other hand, if we don't spend the money on some of these projects now, they may cost more - much more - in the future. There are fears that a similar spending spree by Barack Obama and the Democratic-controlled Congress will stoke the annual deficits and the national debt to the point that hyperinflation may set in. The so-called "recovery" is still a jobless recovery; the working class is not benefitting from the stock market's recovery to the 11,000 level. And what jobs have been created by Congress' spending spree are regulatory and bureaucratic jobs which do NOT create wealth; the health care bill signed by Obama allows the creation of up to 16,000 slots for IRS agents. The IRS does NOT create wealth; it transfers wealth.

At least most of the prospective jobs envisioned in the state legislature's spending spree would actually create wealth.

But surely, the Sons of Norway can pay for their own lodge renovation.

1 comment:

  1. Why are we bonding when we have the money? Why are we spending *all* the money instead of saving some of it for a rainy day?