As Senate leader, Pete Kelly backed major funding cutbacks for university

A recent letter to the editor in Fairbanks all but portrays Sen. Pete Kelly as the patron saint of the University of Alaska.

The truth is more complicated than will be portrayed in his re-election campaign.

Kelly, a former UA lobbyist, deserves most of the credit for putting a 2014 financing plan together to fund the power plant project at the University of Alaska Fairbanks. He also deserves a big part of the blame for a catastrophic decline in state funding for higher education.

Kelly is a career government worker with a state pension who portrays himself as a private sector champion fighting to defeat socialism. He has a adopted a campaign slogan that could have been borrowed from Forrest Gump: “Government should be limited and people should be free.”

The power plant project is critical to the future of the campus because the old plant was long past its retirement date. The new plant is mostly being paid for with borrowed money, requiring the university to raise tuition, use money from fuel savings, and find cash in other areas to cover debt service costs of about $10 million a year.

Those payments will have to be made for the next quarter-century or so. Of the $245 million total, about $87 million was in the form of direct state appropriations. The rest is borrowed money.

While there was a non-binding agreement four years ago that about half of that $10 million would be paid for every year with an extra state appropriation, that deal has been forgotten. Instead, the university has had to cut other areas to pay the debt service as its funding from the Legislature has been slashed.

Had the power plant financing plan not been approved in 2014, it would have been impossible to get it through the Legislature the following years. There are two main reasons.

First, oil prices began to collapse later in 2014. Second, Kelly and the Republican majority opposed any new taxes to pay for critical infrastructure projects at UA or anywhere else.

Kelly has helped lead the charge for a dramatic decline in funding for the university at a period in state history in which the Legislature should be investing much more in higher education.

His biggest push related to higher education in recent years was his failed campaign to allow students on University of Alaska campuses to carry guns.

The state has reduced the general fund appropriation to the university from $378 million in fiscal year 2014 to $317 million last fiscal year. It was raised to $327 million this fiscal year, not enough to reverse the tide of program reductions and dropping enrollment.

At one point in 2016, Kelly voted for a UA budget of $300 million, saying that there were no alternatives because of low oil prices.

There were alternatives, but Kelly refused to support taxes. Kelly claims it would be wrong for the state to distribute Permanent Fund dividends to the people of Alaska while collecting an income tax from "the producers of Alaska."

"There's a foundational absurdity in the fact that under an income tax, what you contemplate is handing a person a check with one hand and taxing them with the other. And it just doesn't make sense," Kelly said in 2017.

So credit where credit is due about the power plant. But hold off on canonization.

Dermot Cole3 Comments