The drama isn't quite over, though. Legislators formally accepted all federal stimulus money available to the state although Gov. Palin said she opposes taking about a third of it (much of this for education) because of "strings" attached, such as requirements to continue the programs after federal money ends. Legislators said they couldn't find strings and accepted, and appropriated, the money for state programs.

The betting is that Palin will veto some of this, leaving legislators with a choice of overriding her vetoes. This takes 45 votes in the 60-member House and Senate, a margin normally difficult to muster. Given the state of relations between the governor and Legislature, however, it could happen. What happens next is murky. Assuming a veto override happens, the governor could order state agencies not to formally "apply" for the stimulus funds, an option if Palin really wants to play hardball. If this happens, there could be a lawsuit that argues the governor is illegally impounding funds appropriated by the Legislature (there is a mid-1980s state Supreme Court decision on this point). In any event, more to come on this!

There is no question that the state will receive funds for capital infrastructure items (mainly highways and airport work) as well as funds to enhance Medicaid services.

Another end-of-session dustup came over $9 million (later reduced) to the governor's office to study in-state gas needs. The budget addition came unexpectedly in the late hours of the House Finance Committee's deliberations on the capital budget and it caught several members by surprise, leading to some stern remarks. The money was ultimately tucked into another bill. Basically, it funds a study of whether the overall public interest is better served by an in-state gas "bullet" or "spur" pipeline by way of a Richardson Highway route (as proposed by the Alaska Natural Gas Development Authority, an independent state corporation) or the Parks Highway route proposed by Enstar Natural Gas Co. What caused the ruckus was budget "intent" language restricting the money to be used for a "railbelt" pipeline (i.e. the Enstar route) which legislators objected to because it favored a private company. The intent language has now been broadened.

In terms of overall spending for upcoming Fiscal Year 2010 (the budget for which lawmakers have just given approvals) there were no surprises. The operating and capital budgets are tight, which is appropriate given the revenue circumstances, and most observers in the capitol give credit to the Finance committees in both House and Senate working well with each other and with the governor's Office of Management and Budget. There will have to be a draw on the Constitutional Budget Reserve, the state's main savings account, to cover the deficit between revenues and spending. The size of the draw won't be known for some time, but it is expected to be about $1.2 billion (another $1.3 billion will be needed to cover the deficit for the current FY 2009 budget year). The CBR account holds about $6.5 billion.

A few bills of interest: The state's minimum wage was given a modest increase. Rural residential electrical consumers will continue to benefit from a $1 per kilowatt hour "ceiling" for state Power Cost Equalization support. Without a statute change just approved by lawmakers the ceiling would have reverted to 52.5 cents/kilowatt hour, hiking electrical costs in small communities around the state. The governor has her veto authority on bills that passed, of course.

One bill that did not pass was a proposal to extend the suspension of the state motor fuel tax. This means that tax will kick back in by late summer.

Mike and Tim Bradner publish the Alaska Legislative Digest and Alaska Economic Report. For information, email: timbradner@pobox.alaska.net