Parnell slashes $336 million in spending

With dark clouds hanging over Alaska's largest city, Gov. Sean Parnell unveiled the state's final budgets Thursday morning with an emphasis on cost cutting. In a press conference in a downtown Anchorage conference room, Parnell announced he had cut approximately $300 million, or about 10 percent, from the $3.1 billion capital budget the state Legislature passed him in May.

The former lieutenant governor -- who took over the state's top job after Sarah Palin resigned halfway through her first term -- also said he had given the $8 billion state operating budget a $36 million haircut. Operating budget cuts are generally considered far less politically charged than cuts to the capital budget that funds roads, buildings and other new, state construction, but Parnell altered that dynamic with the announcement he was cutting $2.9 million intended to expand Denali Kid Care, a health program designed to provide care for children of low-income Alaskans -- a move Democrats were quick to criticize.

Parnell said he made the cut after recently discovering Denali Kid Care finances abortions.

"There are hundreds of abortions being paid for by this fund," he said.

Asked about Alaskans who would be denied affordable health care because of the veto, Parnell said, "I want to be able to provide those services, but if your governor doesn't stand for life and liberty, or at least as he understands it in his conscience, then you don't have a governor."

A conservative Christian Republican, Parnell faces two challengers in his party's August gubernatorial primary. He has been working hard to establish himself as fiscal conservative. Early on, he signaled his intention to slice the state capital budget. He expressed the opinion the capital spending bill was too large and needed to be trimmed, but until now lawmakers and their constituents were left unsure about which projects would get slashed and which would slip under wire. Now they know.

The governor said Thursday that his vetoes (PDF) came not because he disliked certain projects, but because some could be deferred to future years. While Alaska is financially better off than other states, he said, there are signs that tougher times could be coming.

"Alaska is going to take a different approach," he said. "While times are good, while we have a surplus, we are going to make smart, targeted investments, both to take care of what we have and to build new infrastructure."

Parnell's cuts should play well to conservatives who generally dislike all government spending, but not necessarily to independents or liberals. Some of the latter have argued that since Alaska has money to spend it should go counter-cyclical to a continuing national economic slump and take advantage of the market to make investments in vital state infrastructure when construction costs are low.

"We're entering a new era of federal fiscal austerity, and that means Alaska needs to stand on its own two feet," said Hollis French, speaking before Parnell met the media Thursday. "If he cuts too much, it leaves Alaska unbuilt. We're still a young state, and we have tremendous infrastructure needs." French is one of three Democrats vying for the governor's job.

Capital budgets tend to be contentious because there are two simple ways to think about them: Fatty waste directed at building monuments to politicians, like the tony Ted Stevens Anchorage International Airport, or job creating projects aimed at building infrastructure beneficial to state residents for years to come, like the functional Ted Stevens Anchorage International Airport.