Gov. Sean Parnell announced his plans to submit a supplemental spending proposals to the Legislature that would forward-fund K-12 education and repay a $400 million debt to a state reserve fund. He also wants to set aside $100 million for his proposed deferred maintenance program.

The spending of a portion of the projected surplus of more than $2.2 billion was meet with support from members of the Senate Republican caucus, including local Sens. Con Bunde and Fred Dyson.

Much of surplus revenue is due to oil prices trending higher than earlier expected.

A major piece of what's being requested is $1.1 billion to the Public Education Fund for student schooling and transportation costs in the next fiscal year. About $400 million will be used to repay money tapped from the Constitutional Budget Reserve.

The Senate Republican Caucus expressed their support for many of the goals contained within the FY2010 supplemental budget released Tuesday while recognizing room for increased savings and encouraging a more long-term view of state budget surpluses.

Sen. Dyson, R-Eagle River, said he is concerned about the rising cost of formula-driven spending.

"I recognize that programs such as Medicaid are expanding in numbers of users, and that is reflected in the $44 million requested for formula programs," he said. "I note that the Governor did not request funding for an increase in eligibility for Denali KidCare because the bill to do so has not passed. While he and I disagree on expanding the program from 175 to 200 percent of poverty level, he may be amenable to making such an increase contingent on having a budget surplus."

Sen. Bunde, R-Anchorage Hillside and Eagle River Valley, favored the proposed sending but called for better stewardship of surplus revenues.

"I strongly encourage that any spending proposals based on using a budget surplus, in this or any other year, look at that 'surplus' in the context of a three- or five-year spending plan," he said. "I think the question of whether or not it is truly a 'surplus' – if it is sandwiched between two or four years of deficit or even flat spending – is one we should be asking ourselves more often."

Sen. John Coghill, R-North Pole, agreed that the Governor's first priority should be saving surplus dollars.

"I support the Governor's request to return the $400 million to the CBR that we have borrowed over the lean years," he said. "That is what the CBR is there for. I also support any efforts to park more of the surplus in the statutory budget reserve. We anticipate more lean years, with the Trans Alaska Pipeline dropping in throughput by six percent or more a year. Alaska's leaders have done a good job in the past of saving for future generations – through the Permanent Fund, the CBR, and other set-asides – and I think we need to continue with that attitude."

Karen Rehfeld, director of the state Office of Management and Budget, said a surplus of about $438 million would remain following the supplemental requests. She said Parnell's request for $100 million for deferred maintenance, which he spoke about in his State of the State address last month, is expected in a stand-alone bill.