Legislative budget hawks are eying a lot of field mice now that the sun is shining on the governor's spending plans. And there's more than a half billion new field mice in the governor's proposed budget.
     Here are some of the budget details, adorned with some historical perspective.

• $3.6 billion*--That's the governor's proposed general fund spending level for fiscal year 2007. General fund spending in the last year of the Knowles administration was $2.38 billion*.
• $540 million*--That's the governor's proposed increase in general fund spending from this fiscal year to the next. That's more than the state's total nominal dollar general fund spending in FY1976 (we were feeling flush then with expectation of the first barrel of oil flowing through the pipeline).
• $432 million*--That's the general fund amount the governor wants to spend on capital projects. The governor's proposed general fund construction budget is $93 million higher than this year's GF construction budget, which was far larger than normal.
• $1.2 billion*--That's the expected surplus in the general fund at the end of the current fiscal year. That's a windfall. It's more than 10 times what was expected when the legislature completed its spending plan at the end of last session.
• $424 million*--That's the projected deficit for the next fiscal year envisioned in the governor's proposed budget. What the governor proposes spending next year falls that much short of what Alaska can reasonably expect to earn next year. Add in anticipated FY07 supplemental appropriations, and the anticipated deficit between FY07 general fund revenues and FY07 general fund spending is $481 million*.
• $565 million*--that's the amount of this year's $1.2 billion windfall surplus the governor proposes to dump into a public education fund as a partial down payment on education funding in the next fiscal year. By using this much of the FY06 surplus to fund some of FY07 education costs, the governor's proposed FY07 deficit is wiped out.
• $400 million*--That's what the governor wants to spend this year as a down payment on partial state ownership in a gas pipeline. A gas pipeline contract has yet to be negotiated outlining any state role and the legislature has nothing in front of it that can help determine: a) whether we should have an ownership position; and b) how much we should spend for an ownership position.
• 7-1-07**--That's the start of FY08 when Alaska will need to begin spending out of the constitutional budget reserve (our savings account) to sustain the new, higher level of spending proposed by the governor if oil prices come in at the Department of Revenue (DOR) forecast. Here's what the Legislative Finance folks say about that in their analysis of the governor's spending plan: ". . . it can be easy to overlook the fact that the [FY06] surplus is not nearly enough to sustain the Governor's proposed level of spending in the long term."
• 72 months**--Just over a year ago, the DOR predicted we had six years, 72 months, before we'd run out our constitutional budget reserve savings account. The expectation many of us had was that this year's $1.2 billion surplus increases our savings cushion--thereby adding dozens of months to the viability of the CBR.
• 36 months**--That's when the CBR now actually runs dry, according to the most recent DOR prediction, if the governor's FY07 spending plan is adopted. Instead of adding to the CBR cushion, the governor's proposed budget for next year pushes general fund spending to a level that cuts the life of our savings account in half according to the people who wear green eyeshades over in the DOR.
• 0+--That's the amount of production tax paid on the world class Kuparuk oil field because of an antiquated state oil tax recipe. As one oil expert, hired by DOR, testified "wealth is slipping through the fingers of Alaskans."
• $7.256 billion++--That's the net revenue to oil companies operating in Alaska pumping oil owned by the state when the price of oil hovers around the current level of $60/barrel. 
• 50%*++--Alaska's share of oil revenues is one half the share that goes to multi-national companies pumping our oil when oil is at $60/barrel. According to DOR testimony, that's far less than other oil regimes around the world.

     I couldn't help throwing in the last three bullet points even though they are not directly related to the governor's proposed budget for next year. Obviously, a lot of the budget problems go away if we carefully realign our oil tax recipes. 
     The governor, and his experts in the Department of Revenue and their consultants, are now joining Democrats in seeking a fair share oil tax plan. All I can say is if the governor is going to boost general fund spending to a level more than 50 percent higher than the last year in the administration of Gov. Tony Knowles, they better get religion on oil taxes. They've come a long way now that they are testifying Alaskans are "letting wealth slip through the fingers."
     Of course, there are two ways to balance a budget: first, boost revenues; second; don't spend as much. Before this session, my Democratic colleagues and I agreed we'd do our best to ensure that at least half of the $1.2 billion windfall would be socked away. The above numbers that define the governor's budget show how challenging such a commitment might be. His party is in control of both bodies of the legislature and they will give great deference to his 'spend more' plan (remember, his FY07 deficit budget has already eaten up half the windfall and his plan to spend money on a yet to be negotiated gas pipeline eats up most of the rest).
     We know that we must make some investments in education and safe neighborhoods, but we need to be responsible with both the checkbook and the savings account. Wish us the best.

*Numbers from the legislature's non-partisan Legislative Finance Division.
**As reported by the Alaska Budget Report.
+Testimony presented last week to the legislature on behalf of the Department of Revenue.
++Department of Revenue, tax division (1-10-06)
       

Phone: (907) 465-4947 Fax: (907) 465-2108 Mail: Sen. Elton, State Capitol Juneau, AK 99801   Got a scoop? Call or email your tips and suggestions to any of the email addresses below: Email: Senator.Kim.Elton Jesse.Kiehl Paula.Cadiente Paul.Wiley Web: http://elton.akdemocrats.org

Capitol Undercurrents

Tread dread--There's heavy breathing in the House and Senate Finance Committee rooms. The elevators are out in the capitol and we haven't heard so much panting in the fifth floor finance committee rooms since the Department of Revenue announced a $1.2 billion general fund surplus this year. We've even heard people counting the treads in the flights of stairs that move legislators and staff from ground to fifth. We've gone from bean counters to stair counters. I don't know if that's good or bad.

Nice ice, but. . .--A sharp-eyed and well-traveled constituent tells us the picture of the glacier that adorns the Alaska Permanent Fund Corporation's 2005 annual report is the Perito Moreno Glacier in El Calafate in the Patagonia region of Argentina. The annual report caught his eye, he said, because he recently had taken a picture of that glacier from almost exactly the same spot. I guess it's always good to look for nice photos as well as reasonable and secure investments Outside.

Pop culture in flippin' weird places--The governor's recent speech references to the movie Napoleon Dynamite have created a boom in movie memorabilia and mugging around the capitol. My favorite 'spawn of the movie craze' act may be Kenai Republican Rep. Kurt Olson's "Vote for Pedro" button (also from the Napoleon Dynamite movie). It has this subtle double entendre allure to it. Pedro was a character in the movie but there's another Pedro hanging around the capitol-Pedro van Muers, a consultant to this governor and the previous governor on gas and oil. I'm ready to vote for Pedro VM now that he's endorsed the Dems' position that Alaska's oil tax system short-changes Alaskans. Unfortunately, my current favorite Pedro is a foreign national not eligible for elective office in Alaska.