Palin said she won't accept $214.2 million because of federal strings, or continuing obligations, attached to the funds. Legislators, meanwhile, are challenging the governor on that, saying they haven't found any strings.

To keep options open in getting all of the money, the House and Senate have passed resolutions accepting all stimulus money available.

Stevens

Palin has the last say on this, however. The governor has not just one but two final shots, said Senate President Gary Stevens, R-Kodiak.

First, the governor can veto funds legislators accept and insert into appropriation bills. Second, even if lawmakers override Palin's vetoes and the money is appropriated, state agencies must formally apply for the funds, and this is a step that Palin will control, Stevens said.

Whether Palin will oppose legislators in accepting the $242 million is still unclear, Stevens said. Most of this money is for operating programs, primarily for education. Stevens spoke in a March 31 briefing by Senate leaders.

House Finance Committee co-chair Rep. Mike Hawker, R-Anchorage, said the "strings," don't exist.

"We have had extensive hearings in the Finance Committee with state agencies and we are not seeing any issues regarding continued obligations," Hawker said in a March 30 briefing by House leaders.

The only issue he has come across involves $5.8 million for recruiting and equipping public safety officers, but the people affected are already on staff so it's not a major obligation, Hawker said.

It's also clear that the state can accept funds for energy conservation and energy efficiency, he said. Reports that the state can only accept the funds if the Legislature enacts a statewide building code is a myth, Hawker said.

Stevens said it doesn't appear that there are federal strings, but it may be too early to tell because the information coming from federal agencies isn't clear.

"We don't have all of the information yet. We get different answers from them on different days," he said.

Stevens also said he has determined that there are no strings tied to funds for schools and special education needs, however.

The real concern Stevens has is that expectations might be created with the public that when the federal money runs out in two years, the Legislature will "back-fill" with state funds, he said.

Sen. Charlie Huggins, R-Wasilla, said he believes school districts, which would be major recipients of the funds, recognize the one-time nature of the money.

"School people are used to working with grants, which involve one-time money, so they are very comfortable with this," Huggins said.

Senate Finance co-chair Sen. Bert Stedman, R-Sitka, said he is discussions with his counterpart on the House Finance Committee about the insertion of budget instructions in appropriation bills that contain stimulus funds to explain how the money can be used.

Palin has said she will accept $642.9 million of capital items in the stimulus funds available for Alaska, and legislators credit her for this.

"I'm not reluctant to take federal money to build roads and bridges because we're so far behind other states in terms of infrastructure," Stedman said. "To not take it would be crazy. But we do need to be concerned about unfunded mandates which would cause future growth in the operating budget."

Tensions persist in Juneau over federal stimulus money

By Tim Bradner

Alaska Journal of Commerce

With about two weeks to go before adjournment, Alaska's Legislature will wind up not having done much in its 90-day 2009 session.

The budget will pass - that's a must - but not much else.

There are a lot of urgent issues before lawmakers, but most of them, like a complex restructuring of utilities needed to build new power generation capacity for Southcentral and Interior Alaska, are too complex to rush through before the April 19 adjournment, legislative leaders say.

Bills that don't pass this year will still be before the Legislature in 2010.

House Speaker Mike Chenault, R-Nikiski, says there's not a lot that really has to pass this year except for the budget, although a bill to provide a financial backstop for Alaska Student Loan Corp. bonds was given priority.

If the measure does not pass, the state student loan corporation will be unable to sell bonds to finance college loans for Alaskans for the upcoming 2010-11 academic year. House Bill 172 passed the state House March 23 and is now in the Senate Finance Committee. Gov. Sarah Palin has identified the bill as one of her priorities.

The governor has also put the utility restructuring bill on her priority list, but it isn't going to pass this year, said Anchorage Republican Sen. Lesil McGuire, chair of the Senate Energy Committee.

Palin didn't introduce the bill until mid-session and six utilities in Southcentral and Interior Alaska have yet to agree to it, McGuire said March 31 in a briefing by Senate leaders.

Another priority bill for the administration that is on now on the slow track is one that would insert Palin's Alaska Gasline Inducement Act requirements into the Alaska Pipeline Act, the state's pipeline regulatory act. McGuire said this proposal needs extensive study.

It would place the AGIA requirements into expansions of Cook Inlet natural gas pipelines, for example, which could delay critical improvements to the region's gas distribution system.

Legislators are working on several other important bills and some of them may squeak through by the April 19 adjournment.

One is House Bill 135, sponsored by former House Speaker John Harris, R-Valdez, which would give the state Department of Environmental Conservation authority to issue waivers to cruise ships beyond a 2010 deadline for meeting strict limits on discharges from the ships in state waters.

Cruise companies say they are working on shipboard pollution control technologies, but won't have them in time for the 2010 deadline imposed by a citizen ballot initiative. DEC will be able to issue waivers until 2014 if the bill passes, and would also convene a scientific review panel to review technology.

Cruise companies say the limits are unfair because it holds them to higher pollution-control standards than those that apply to coastal communities where the ships dock.

Fuel "price gouging" bills are also being considered. The legislation would give the state attorney general authority to levy penalties against refiners or fuel marketers or distributors if prices for gasoline and diesel are unfairly high.

Senate Bill 54, sponsored by Sen. Bill Wielechowski, D-Anchorage, is in the Senate Judiciary Committee. House Bill 68, sponsored by Rep. Pete Peterson, D-Anchorage, is in the House Labor and Commerce Committee.

Refiners and fuel companies object to the legislation because the bills are vaguely worded, and that could open the door to abuse by state officials.

Other bills at advanced stages in the Legislature include proposals to raise the state's minimum wage and allow the state and municipalities to offer a "defined benefits" retirement plan as well as the "defined contributions" system now required.

The state and municipalities used to have defined benefits pension plans, where pensions are guaranteed, but abandoned it in favor of a defined contribution system where public employees invest and choose their asset allocation in 401K-type plans.

With the stock market in disarray, it is difficult to recruit teachers and other skilled public employees with defined-contribution plans and offering the option of added security through a defined benefit pension would aid greatly in recruiting, municipalities and school districts say.

The House version of the legislation is HB 30.

Proposals to raise the state's minimum wage are also at advanced stage of consideration in the Legislature. The House version, HB 29, would increase the wage by 50 cents per hour while the Senate version, SB 1, would hike it $1 per hour.

Fast-food chains, which hire entry-level workers, and seafood processors that employ large numbers of low-skilled, seasonal works, argue the legislation could impose substantial new costs at a time when the nation's economy is in recession.

The federal minimum wage rate will increase to $7.25 per hour in July, which would raise the current Alaska minimum wage of $7.15 per hour to $7.75 per hour if the House bill were passed and $8.25 per hour if the Senate bill were approved.