capital focus

I don’t remember there being this much trouble last year.
Lawmakers and now the governor are in something of a tiff over her budget proposal, how she’s portrayed it, and, ultimately, how big it is. Or rather, how much bigger it is than last year’s.
Palin of course continues to promise fiscal restraint, but lawmakers are charging that her budget represents a big jump in spending over last year.
I spent about 40 minutes yesterday at a “let’s-get-to-the-bottom-of-this” talk with the House and Senate Finance Committees, the Legislature’s budget man, and the governor’s budget woman. It lasted at least an hour and 40 minutes.
Here’s how I understand it:
1. Palin is proposing deposits into a number of funds and making various other savings and investments, so there’s some confusion over what should be included in the budget. David Teal, the legislative finance guy, is now using the term “transfer” for any time money isn’t actually being spent — isn’t leaving the state’s hands.
But even then, should all spending count as “spending?” What about Palin’s deposit to pay down the retirement system debt? And what if doing so actually saves the state money?
2. There’s also some confusion over how supplemental budgets are counted. By paying for things with money from the last fiscal year, the gov could, if she wanted, keep the new budget slimmer and effectively make the increase over last year’s smaller. (I don’t know what actually happened here.)
3. Then there are the oil tax credits. The oil tax essentially has two parts, the tax part and the credit/deduction part. Big oil companies that pay tax on their production simply deduct the credits and deductions, and the state simply gets less revenue. Small companies that don’t pay production tax actually get direct payments for their “credits” — one could say subsidies — and that shows up in the budget as a (new) expense. But if the state is bringing in hundreds of millions more because of the new tax, should Palin be blamed for “growing” the budget by paying out some tax credits?
I guess the show-down part happened after I left. Neither budget guru is particularly aggressive, but I guess some lawmakers continued to suggest that Palin was cooking the books.
Palin issued a somewhat sharp statement after the hearing saying “we fundamentally disagree that spending is higher than reported…”
The confusion is underlying Finance co-chair Sen. Bert Stedman’s plea for clarity in the whole process. And it does seem like it’s confusing even to lawmakers.
At the start of the hearing, Rep. Les Gara asked Teal to explain a $531 million deficit in last year’s budget.
Teal explained that the state expected to have $3.5 billion in revenue that year (the current fiscal year).
“You spent 4.1,” he said. “On a cash-flow basis . . . you spent more than you had.”
Because of high oil prices and a new oil tax, the state actually brought in about $6.7 billion, he added. Hence the big surplus.