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Palin rejects nearly 30 percent of stimulus funds

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ANNE SUTTON | March 20, 2009 07:31 AM EST | AP

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JUNEAU, Alaska — It's up to the Alaska Legislature to request hundreds of millions of dollars in federal stimulus funds from the federal government.

Gov. Sarah Palin said Thursday that she would accept only 69 percent of the estimated $930 million dollars that could flow to the state, including $514 million for capital projects and $128 million for a hike in Medicaid reimbursement.

Palin said she would accept money that is "timely, targeted and temporary" and does not create strings that will bind the state in the future.

"I can't attest to every fund that's being offered the state in the stimulus package will be used to create jobs and stimulate the economy, so I'm requesting only those things that I know will," Palin said at a news conference at the Capitol. "Public discussion will have to ensue on all those other dollars that some will say 'you left on the table.'"

Some other Republican governors have also announced reservations about accepting the federal money, particularly when it comes to expanding jobless benefits.

Texas Gov. Rick Perry last week announced that he turned down $555 million of federal stimulus funding that would expand the state's unemployment benefits. Louisiana Gov. Bobby Jindal has said he would not accept nearly $100 million to expand unemployment benefits. And South Carolina Gov. Mark Sanford has said he only wants to use the federal money to pay down debt.

Other Republican governors including Charlie Crist of Florida and Arnold Schwarzenegger of California have welcomed the stimulus bounty.

Palin's rejection of $160 million for education drew a rebuke from Anchorage Superintendent of Schools Carol Comeau, who said she was shocked and disappointed.

"We believe that we can make very good use of the funds, not only in job preservation but also in adding new positions to ultimately use these funds to increase student achievement for our neediest children," she said in a news release.

Comeau pointed to money that would have gone into training for special education teachers and additional programs and support for needy preschool children.

The governor has until April 3 to formally request funds from the stimulus package. It's unclear if legislatures are under the same deadline but Alaska lawmakers likely will stick to the same date to be safe.

Overall, Palin rejected almost $288 million and many, such as Senate Finance Committee Co-Chairman Bert Stedman, were surprised.

"I think the Legislature will take a good hard look at the impact on Alaska," said Stedman, a Republican. "The governor might have a broader view."

With so little time left before the April 3 deadline, Stedman expects the Legislature will ask for the full amount, and if they determine later that it would have adverse long-term impacts on the state, to decline it then.

Alaska has been somewhat cushioned from the effects of the global recession, but the state faces a $2.6 billion deficit over this year and next from low oil prices and declining oil production on the North Slope. Oil makes up about 90 percent of state revenues.

Sen. Hollis French, a Democrat, said the governor was breaking with a long tradition in Alaska.

"The state has made its business to get as many federal dollars as possible to help us create an infrastructure and build our state," he said. "I just really think the governor made a mistake here."

Palin on Thursday sent a spending bill to the Legislature laying out funding for capital projects that she is willing to accept, on top of the $262 million transportation stimulus spending bill that is already under debate.

The additional money Palin said she would accept includes $116 million for a University of Alaska Fairbanks research vessel, $68 million for water and sewer projects, $39 million for public housing projects and $21 million for education and job training.

Palin did not request funding for energy efficiency and conservation block grants, an expansion of unemployment insurance eligibility, weatherization money, employment services, among others.

The five-member conservative Republican minority in the Senate supported the governor's decision. Sen. Con Bunde, a Republican, compared the package to having too much to drink.

"A good time may be had by all, but the hangover the next day, and the consequences of what you did while you were drunk, may be with you for a long, long time," Bunde said.

Palin said she was acting in the best interests of Alaskans but Democratic Rep. Les Gara questioned the motives of the former Republican vice presidential candidate.

"I read it that she's going to be running for national office and has a campaign position that unfortunately conflicts with the state's interests," he said.