FAIRBANKS — Gov. Sean Parnell signed an annual statewide budget Wednesday that, despite some vetoes, promises millions to help Fairbanks with a nagging air pollution problem and boost renewable energy production.

Parnell cut or reduced proposed spending for a handful of projects, including $6 million to fix up the Noel Wien Public Library and $2 million for a mentoring project. He halved a proposed $10 million grant for Fairbanks’ transportation planning agency.

Parnell also halved a line item that would have let the University of Alaska Fairbanks borrow $67 million for campus projects, saying the $33.5 million balance would be considered “in future budgets.”

The $2.8 billion construction and capital spending act is now seven-eighths the size of drafts inked last month by the state Legislature. Parnell said his cuts will keep state government “at fighting weight.” 

Parnell kept his veto pen away from funding for a proposed Tanana River bridge and an environmental study of a proposed road to Umiat-area oil fields. He also cleared millions to help build a new wind farm near Healy and to let Fairbanks expand a wood stove trade-in program.

Parnell also signed a roughly $8 billion operating budget, but his comments — and his vetoes — on Wednesday focused largely on capital spending plans. That budget has for two years held well above averages seen over the past quarter century, he said. 

“We clearly have a healthy capital budget,” Parnell said, adding that it was “imperative” to save as much as possible, given questions over declining federal aid, liabilities toward state pension plans, and long term oil production. Parnell has vetoed $700 million across two years. He told reporters he would entertain the idea of a formula-based ceiling on future capital spending bills. 

Help for the Tanana River bridge will arrive via a $44 million grant, enough to wrap up the the project’s $180 million-plus financing. The road-and-rail bridge will connect Interior highways to vast military training grounds. It will also position the state’s railroad line for eastward expansions. It now ends at Eielson Air Force Base.

Rep. Tammie Wilson, R-North Pole and a House Finance Committee member, said Parnell showed a wise balance of practicality and support for development.

“And I’m very pleased that assistance for air quality is underway,” Wilson said by email of a $3 million capital grant. The help arrives days after municipal leaders expanded a home heater trade-in program, which uses cash incentives and tax breaks to encourage residents to trade in less efficient wood- or coal-fed heaters for newer, more efficient models.

Sen. Joe Thomas, D-Fairbanks, said Parnell’s veto of money for the downtown library was surprising given decisions such as the governor’s approval of $2 million for the University of Alaska Anchorage’s Great Alaska Shootout tournament, money to boost appearance fees for visiting teams and subsidize visiting ticket holders’ costs.

“That seems a little ridiculous to me,” he said.

Mayor Luke Hopkins said his office had not fielded questions from state administrators about the proposed library project prior to Parnell’s veto. 

Other projects in the budget were far from sure things. Parnell approved $500,000 for Fairbanks to study natural gas supply options. Borough government wants to get much of that cash to contractors soon, as Fairbanks’ voters will be asked in October to give the public Alaska Gasline Port Authority approval to truck liquified gas from the North Slope. 

Almost $11.5 million will help Fairbanks’ electric utility finance the $90 million Eva Creek wind farm near Healy. Golden Valley Electric Association has publicly sought to wean itself from expensive, diesel-generated power and to expand into renewables. It currently only gets a fraction of its power from renewable sources — mostly the Bradley Lake hydroelectric project near Homer. 

Brian Newton, Golden Valley’s CEO, said the grant will let the utility trim the price of wind-produced power by around 11 percent. GVEA will borrow for construction money.

The budget also holds $65.7 million to prepare for a Susitna River hydroelectric dam and, by Parnell’s count, $43 million to repair and beef up parts of the Dalton Highway.

Parnell cut one-fifth of the Legislature’s funding proposal for statewide household energy-efficiency remodeling subsidies, but that cut still leaves $101 million for the state-owned Alaska Housing Finance Corp., roughly enough to meet public demand for the program for two years.

Parnell said he aimed to save as much as possible and treat the state’s regions equitably while also supporting the economy. Savings, he said, will offer a “shock absorber” in case the state hits hard times and will let government leverage financing for longer-term economic projects.

Some of the Fairbanks- and Interior-specific projects included in the capital budget signed Wednesday:

• Tanana River bridge construction, $44 million;

• UAF bonding authority, $33.5 million ($33.5 million vetoed).

• Eva Creek wind farm (GVEA), $11.5 million;

• Fairbanks area transportation, $5 million ($5 million vetoed);

• Barnette Magnet School renovation, $9.5 million;

• Road service area support, $5 million;

• Wood stove conversion program, $3 million;

• Fairbanks Pipeline Training Center construction and equipment, $2 million;

• Gold Hill bike path, $1.1 million;

• Tanana biomass heat/power project (Alaska Power & Telephone Co.), $380,000;

• Wood heating research (Interior Regional Housing Authority), $154,477;

• Fairbanks Fire Department, breathing apparatus, $300,000;

• Carlson Center improvements, $3.5 million;

• Hunter Elementary School technology upgrade, $33,000;

• Fairbanks borough, natural gas distribution study, $500,000;

• North Star fire station expansion, $92,250;

• Birch Hill Recreation Area, $1.45 million;

• Pioneer Park maintenance, $400,000;

• Classroom technology (Fairbanks school district), $281,000;

• Arctic Winter Games 2014 host preparation, $1 million;

• Biomass energy research (Alaska Resource Agency), $500,000;

• Boys & Girls Club, technology and kitchen upgrades, $20,000;

• School garden project (Calypso Farms), $166,750;

• Chena-Goldstream Fire Department water tanks, $40,000;

• Cold Climate Housing Research Center, $180,000;

• Don Bennett shooting range construction, $75,000;

• Ester Volunteer Fire Department engine equipment, $300,000;

• John Trigg Ester Library design, construction, $80,000;

• Fairbanks Community Food Bank, equipment, $175,000;

• Fairbanks Native Association kitchen expansion, $107,000;

• Fairbanks Resource Agency boiler and fuel tanks, $64,890;

• Invasive weed project (FSWCD), $10,000;

• Fairbanks Tennis Association, court repair, $65,000;

• Research and survival program (Georgeson Botanical Garden), $50,000;

• Softball complex renovation (Golden Heart Softball Association), $120,000;

• Playground improvement (Goldstream Valley Park, Lions Club), $40,000;

• Kids Voting program, $15,000;

• Ski trail maintenance (Nordic Ski Club), $31,500;

• North Star Council on Aging, $150,000;

• Literacy initiative (Imagination Library), $50,000;

• Community center (Pleasant Valley Community Association), $150,000;

• Resource Center for Parents and Children, $15,697;

• Fire equipment (Steese Area Volunteer Fire), $169,500;

• Tanana Valley Sportsmen’s Foundation, $15,000;

• Outdoor learning project (Early Head Start), $25,000;

• Wellspring Revival Ministries heating system, $38,000;

• Fairbanks Correctional Center projects, $915,000;

• Department of Fish and Game, office repairs, $750,000;

• Mastodon Trail work, $85,000;

• Bike and pedestrian path, Chena Small Tracts Road, $100,000;

• Bike and pedestrian path, Birch Hill, $180,000;

• Fairbanks International Airport, rescue and firefighting facility, $16.7 million (largely federal);

• Potter Road surfacing, $250,000;

• South Cushman Street roadwork, $1.7 million;

• Parks Highway rebuild, Nenana Canyon to Bear Creek, $27 million (federal).

Included in the vetoes

• Noel Wien Library maintenance, $6 million;

• Friends of the Children mentoring, $2 million;

• Tanana Lakes Recreation Area, $1 million;

• Dog park improvements, $25,000;

• UAF bonding authority, $33.5 million ($33.5 million remains).

• Fairbanks transportation $5 million ($5 million remains)

Contact staff writer Christopher Eshleman at 459-7582.