Are We Saving Enough?

Much is being made of the legislature’s plans to save part of the oil revenue windfall. In some cases, too much.

The current estimate is that the state will receive about $15.9 billion for the current year, which ends June 30, and the next year, which begins July 1, combined. (I’m using my friend Gregg Erickson’s numbers here. Why? Well, he’s an economist and I’m not.) So far, we have voted to save $2.6 billion of that by putting it into the Constitutional Budget Reserve. Budget bills that are not yet complete may put another $1.4 billion in the CBR. That’s $4 billion in savings.

(Some people want to count another $1 billion set aside in the statutory budget reserve. But since that money is as easy to get out as it was to put in, I’m not counting it as savings.)

That seems like a lot. In a way, it is. No other legislature has ever put that much money away. But compare it to the spending: $8.8 billion in operating spending for this year and next. So the $4 billion that is actually proposed for savings is somewhat less than a year’s operating budget. Doesn’t look like quite so much now, does it?

Especially when you consider that the current plan is to spend the rest of the money for capital projects. That’s about $2.1 billion. So another way to look at the $4 billion in savings is that it’s less than two years’ capital budgets.

And if you combine operating and capital, fuggedaboutit.

Don’t get me wrong. Some savings is better than no savings. But we could easily put another $1 billion, maybe $2 billion, into the CBR, and we’re not doing that.

Smelling the Finish Line

Today is Day 81 of the session, meaning we’ve got, counting today, just 10 days until the end of the 90-day session.

Are we going to get out in 90 days? Well, the biggest threat to that is the ongoing dispute between the governor and legislative leaders over capital budget spending. I think legislators’ commitment to finishing in 90 days will melt away if that means leaving without a capital budget.

Is that a possibility? Maybe. Depends on how things fall out. Right now, Gov. Sarah Palin is in a real tussle with the state Senate. (Yeah, I know. What’s new about that?) The Republicans who are in charge of the House are grumbling about the governor, too.

It’s not clear yet whether Palin’s veto decisions on the supplemental budget will make things better or worse. Since this is the stage of the session when things happen really fast, the situation will probably change a dozen times or more before we gavel out.

Don’t Blink

When the operating budget went to conference committee, the rules for public notice on bill hearings/actions changed. Now, we’re under the 24-hour rule, which means a bill can be noticed one day and heard the next. That means a bill can move much faster, which is good if you like the bill and not so good if you don’t.

EEK! AGIA Returns

The next phase of the Alaska Gasline Incentive Act is headed right for us. Palin has called a special session to begin June 3. We don’t know what it’s really about yet. It could be to consider the TransCanada proposal to build a gas pipeline, or it could be to consider changes to AGIA or, I suppose, it could be to start all over. We won’t know which path we’ll be taking until the commissioners of Revenue and Natural Resources announce their decision on whether to send the TransCanada proposal forward.

In the meantime, there is a lot of maneuvering going on. There is a group of legislators who think the major North Slope gas producers have to be satisfied in some way before a pipeline can go forward. Then there’s a group who really want a line to Valdez to send liquefied natural gas somewhere. Since the TransCanada proposal is for an overland route through Canada, they don’t like it very much.

Don’t know how all that will sort out, although it looks like TransCanada is learning the truth of the axiom: In politics, friends come and go. Enemies accumulate.

For myself, I’m perfectly willing to see what develops. If the administration sends us TransCanada, I intend to look at the proposal critically but fairly.

And let me close with the reminder I try to include with every discussion of AGIA: There is no guarantee this process will get us a gas pipeline. But it’s movement, and that’s better than standing still.

What I’m Doing

My compensation commission bill is still alive and may actually get to the floor of the Senate. So I’m keeping an eye on that. The short form is that it puts the salaries of the governor, lieutenant governor, legislators and commissioners into the hands of a citizen commission. If you want more details, you can read the bill here.

I’m still supporting HJR 28, which would let the voters decide whether to turn the CBR into an endowment. The bill, sponsored by Rep. Ralph Samuels, is in the Senate now, where it’s getting a thorough going over.

And I’m still trying to finish all the proposals that were made during the first round of AGIA, before the Palin administration hits me with another 300 pages or more.

More later.

Best wishes,