May 15, 2006
Monday

One of the biggest capital budgets in Alaska history will keep several villages afloat another year, providing money to pay for such things as fuel, water and mounting debt.

Hundreds of millions more dollars to reduce energy costs and build schools in rural Alaska may be added, if the Legislature passes an oil tax bill in special session.

Some appropriations came in a whirlwind of last-minute votes at the end of the regular session late Tuesday, leading to speculation that Alaskan Bush lawmakers supported the Republican leadership on oil taxes in exchange for rural projects.

It's true in a way, said Rep. Woodie Salmon, D-Beaver, who supported Gov. Frank Murkowski's plan to tax oil company profits at the lower-end rate of 20 percent. Rural Democrats representing some of the state's poorest districts, he said, are aware the governor can strike projects with a line-item veto.

"If we don't vote for it the governor gets to do his little slashing thing," Salmon said.

Salmon's district will get about $30 million in 2008 for two new schools in Arctic Village and Russian Mission. New schools, including six in rural Alaska, were added by the House Finance Committee in the regular session's closing days.

But it's what the Bush didn't get that will have village administrators wringing their hands in search of funding next year, said Bill Rolfzen, with the Department of Commerce, Community and Economic Development.

The problem, he said, is lawmakers didn't reinstate revenue sharing, a program that used to distribute a portion of the state's oil income to communities. Murkowski ended the program in 2003.

Revenue sharing had shriveled with falling oil revenues, but it still provided reliable income for more than 150 villages with small - and poor - city governments, Rolfzen said.

Several bills to reinstate it, introduced by members of both parties, failed.

The state's small governments will get some help from Senate Bill 231, Rolfzen said. The $3 billion capital budget showers communities around the state with money for new airports, roads and sewer systems. If the oil tax bill passes with an effective date of April 1, as has been proposed, an additional $183 million will go into the power-cost equalization endowment, which will help reduce rural energy costs starting next year.

The bill also provides about $67 million for operating expenses starting in July. Of that, $18.5 million will help about 70 cities and boroughs pay public-employee retirement obligations. Another $48.5 million will go to 155 communities to pay for general expenses and energy costs.

But the money is a short-term fix, Rolfzen said. City administrators will be in the same boat next spring, wondering how they'll make payroll or meet rising insurance and fuel costs, he said.

The Legislature could have done more, said Kevin Ritchie, director of the Alaska Municipal League. For example, more than 60 unincorporated communities get no help.

But overall, he said, rural Alaska did well. It hasn't received this much since at least 1999, when the state shared about $48 million with communities.

The bill will help many city governments see another year, he said. Dozens have temporarily shut their doors, reduced services or built significant debt in the last two years.

As for community revenue sharing, the Legislature will likely provide one-year assistance next year as it did this year - if oil prices remain high.

"If oil prices go down, we may not do it," Kevin Meyer, R-Anchorage, said.

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