Lawmakers sweep $94 million into rainy day fund

  • Saturday, April 11, 2015 8:23pm
  • News

The Senate Finance committee swept millions in capital project funds into an account for future years, which some think could help the House majority avoid a tough vote to access a constitutional reserve to balance the budget.

About $94 million left over from more than 100 governor- and legislator-requested projects were parked in the Alaska Housing Capital Corporation fund, a savings account for capital budget money, in the version of the Fiscal Year 2016 capital budget passed by the Senate on Saturday.

No draws from the fund were made in the budget, and the bill includes language that ensures the fund doesn’t lapse.

The $94 million could have covered the bulk of the Senate’s $47 million cut to schools and the governor’s $32 million cut in one-time education funding for FY 16 and $19.9 million for FY 17. But Senate Finance co-chair Sen. Anna MacKinnon, R-Eagle River, said the money needs to be placed in the account for “next year, when we don’t have any money.”

MacKinnon said during a Friday interview the dwindling statutory budget reserve, a state savings account that had only about $1.7 billion in it at the end of March, inspired the finance committee to save that money. The SBR will be empty before the start of the new fiscal year in July, she said. The state is facing an estimated $3.9 billion budget shortfall next year, and another deficit in FY 2017.

The AHCC will be saved for “emergency-type projects and capital-type projects (that) require matching funds we might not have available to us” in the future, MacKinnon said Friday.

She said a transfer to the AHCC usually “doesn’t happen to this magnitude.”

The biggest chunk — $45 million — was taken from a long-awaited natural gas project in Fairbanks. The Interior city struggles with high energy costs.

Once the money goes into the AHCC pot, it can go toward any capital project.

“There certainly are some projects that could go back in general regions,” MacKinnon said. “We’re supportive of Fairbanks using that to reduce their energy costs.”

Normally, money leftover from a House district’s capital project would stay in that district for future projects. This time, a long list of those were rolled up and stuck into savings.

Sen. Bert Stedman, R-Sitka, is one lawmaker whose district lost capital money to the AHCC reappropriation. He said that it was “abnormal, but these are abnormal times.” Although leftover money from old projects usually amounts to very little, he said, smaller communities do rely on it. Stedman said he supports what Senate Finance is attempting to do with the money.

Some in the Capitol speculate that there could be more to it than prudent saving. They say the money moved to the AHCC fund could also serve to prevent a supermajority vote to access the constitutional budget reserve, another state savings account members are counting on to balance Alaska’s books.

The entire session, onlookers have assumed the House and Senate will need a three-quarters vote in each body to access the account.

While the Republican-led majority has that easily in the Senate, the mix of majority and minority members in the House poses a challenge. The House majority would likely have to use operating budget line items to negotiate with the minority to get enough votes to access the CBR.

But with the right financial maneuvering, some say that can be avoided.

With enough money put into exempt accounts that “aren’t available for appropriation,” according to their theory, the Legislature could be able to make a smaller draw from the CBR than it did last year, circumventing the vote.

According to the Alaska Constitution, if less money is available to be appropriated from the CBR this year than was taken the year before, a supermajority vote isn’t necessary, just a simple majority vote. Negotiating with House minority members for add-backs to education or other programs wouldn’t be needed.

Legislative Finance Director David Teal said Saturday that theory doesn’t fly. The $94 million is not enough to cancel out a vote, nor are there other reappropriations being shuffled to other accounts to amount to enough. Billions of dollars would have to be socked away for this to work, he said.

“The Senate passed a CBR vote this morning,” Teal said. “If that goes through on the House side, AHCC doesn’t play any role at all in this.”

Teal said Senate Finance probably picked the AHCC fund because it’s held by a state-owned corporation — the Alaska Housing Finance Corporation — and can’t be dumped back into the general fund after a certain number of years.

“The Senate opted to appropriate money to that account because it doesn’t get swept and they chose not to spend it,” Teal said. “They could have just put that money into the general fund but they just chose not to spend the money.”

The total FY 2016 capital budget is $1.28 billion and includes $113 million in unrestricted state general funds, about $40 million less than the governor included in his version. It represents the state’s leanest capital budget since 2001.

It passed the Senate 18-2, with Sens. Berta Gardner and Bill Wielechowski, both Anchorage Democrats, voting against.

The state capital budget now goes to the House. A House Finance committee hearing on the budget bill is scheduled for 1:30 p.m. Monday.

A conference committee meeting on departmental operating budgets is scheduled for 4 p.m. Monday.

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