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The Capital Budget

What is the Capital Budget?
By statute, the Governor is required to develop and recommend to the legislature a six-year capital improvement program. An appropriation bill covering year one of the ongoing plan (the upcoming fiscal year) must be submitted to the legislature on the 15th day of December, just prior to each regular legislative session. The legislature reviews the proposed capital improvement program and current year appropriation bill and makes decisions necessary to support state services.

What is a capital appropriaton?
As defined by AS 37.07.120(4), " allocation or appropriation item for an asset with an anticipated life exceeding one year and cost exceeding $25,000 and includes land acquisition, construction, structural improvement, engineering and design for the project and equipment and repair costs."

Additional rules used by Legislative Finance to identify "capital" items include:
  1. Grants to communities or organizations; the funding is typically administered by the State, but is not used for "operating" state agencies.
  2. Special contractual studies - studies or research of a temporary nature by non-state personnel; these studies could take multiple years and technically produce an asset at a cost exceeding $25,000. Studies performed by state employees may be added to the operating budget as "IncOTI's".
Agencies occasionally submit "capital" requests that LFD reclassifies as operating items when/if the funding is ongoing and pertinent to the operations of the agency. For example, law enforcement training funding in Public Safety may be more appropriately added to the operating budget.

What is typically included in a capital appropriations bill?
Typical capital projects may include the following:
  • New infrastructure construction
  • Capital improvements to existing infrastructure
  • Infrastructure maintenance/deferred maintenance
  • Information technology upgrades
  • Major equipment purchases
  • Materials stockpiling
  • State equipment fleet replacement
  • Trail/parks construction and maintenance
  • Land purchases
  • Grants to municipalities, communities and organizations
What is the process for developing the capital bill?
After the Governor makes a recommendation to the legislature, identical capital bills are referred to the finance committees of both bodies. Both bodies typically work simultaneously on their own bills with varying degrees of cooperation. There are generally fewer public meetings than on the operating bills, and formal action often occurs late in the session.

It is customary for one co-chair of each body's finance committee to oversee review and modification of the capital bill. Often, the co-chair will have full committee meetings reviewing each project in the Governor's bill. Sub-committees have been formed in the past to further explore topics, but it is not common. After review by the full committee, the co-chair's staff works with committee members, other legislators, Legislative Finance and Legislative Legal Services to complete a committee substitute bill.

What is CAPSIS?
CAPSIS is the Legislative Finance Capital Project Submission and Information System. Created in 2007, this internet based user interface allows communities and potential grant recipients to submit project requests to their legislators, as then each legislative office to input their capital project priorities for submission to the co-chair's office. In-depth information for each project is captured in a digital format that can be retained in perpetuity and readily located by Legislative Finance. The information is available to the public on the internet and is transmitted to OMB for post-session veto analysis.

How does the capital bill get amended?
One or several full finance committee meetings can be scheduled to prepare/amend a committee substitute bill. Formal amendments to the bill can be offered in these meetings. Legislative Finance and Legislative Legal Services are available to assist in the development of amendments.

What happens to the bill after it is passed from the finance committee?
After the bill is adopted by the full finance committee, the bill is passed to the rules committee for scheduling on the body's floor. On the floor, the amendment process can be repeated if desired or necessary.

After the bill passes a particular body, it is passed to the other body where the process is repeated.