Fairbanks Daily News-Miner editorial:
Thumbs up: During the weekend, news few people expected came from Anchorage: the Alaska House of Representatives had, at long last, arrived at a budget deal. In the compromise between the Republican-led majority caucus and the Democratic minority, just short of $15 million had been added to a budget proposed earlier in the week in response to Democrats’ concerns. Funding was restored in areas such as public broadcasting, pre-K education, senior benefits and the Alaska Marine Highway System, as was money to restore contractual pay increases for state workers for whom a pay freeze had been in the cards before the deal.
An increase of $15 million, while a substantial sum of money, is a pittance when compared either to the $5.1 billion operating budget, of which it would constitute 0.3 percent, or the budget gap of at least $3 billion, of which it would make up 0.5 percent. For that matter, the cost of a state government shutdown if a budget isn’t passed in time — even if the shutdown only lasted for a few days — would likely well exceed that amount.
Thumbs down: Still, the restoration of some state workers’ pay increases rankled Sen. Pete Kelly, R-Fairbanks. Sen. Kelly promptly announced his Senate Finance Committee, to which the House budget was sent after passing by a 32-8 vote, would reinstate language invoking the pay freeze. On Sunday, the committee did so, passing an altered budget to the Senate floor that stripped out the state employee pay increases and nearly all of the other items added in the House majority’s deal with minority Democrats — senior benefits, Alaska Marine Highway System funds, money for the Office of Child Services and others.
Standing up for one’s principles is one thing. But demolishing a fragile compromise that took weeks to assemble is irresponsible and risks great harm to the state’s economy.
Agencies that determine bond ratings are likely to take a dim view of Alaska’s scenario, meaning potential increases in interest rates for state bonds that would cost well more than $15 million. And it’s not hard to imagine how devastating the layoff of about 10,000 state employees on July 1 would be, no matter how long they were out of work. The Alaska unemployment rate would rise to about 9.1 percent, by far the worst state unemployment rate in the country.
Thumbs up: While hope of progress by the Legislature may be continually stifled, work on the Interior Energy Project continues, and the Interior Gas Utility plans to hold a celebration of a milestone in the project this week.
On Friday, IGU representatives and other local and state dignitaries will gather in North Pole to hold a symbolic groundbreaking celebration as natural gas distribution lines start going into the ground. The celebration will be symbolic because crews have been doing digging work and placing pipe for a few weeks already — there was no need for work to be held up during the short summer construction season just so the ceremony could be held.
It’s good to see progress made locally on distribution in the Phase 1 area of the gas project. Still, the stickier wicket in the eventual delivery of lower-cost energy to Interior homes is likely to be lining up supply and liquefaction of gas at a price that will make sense for local ratepayers. It would be good to see some movement on that front too.