"This is the first time in about 22 years that the Alaska economy was forecast to lose jobs," said Jay Livey, a legislative aide to the finance committee.
Lawmakers were told Alaska's economy is fragile and to expect fallout from the national recession. It's not just the demand for Alaska oil that's gone down, but for other commodities too, from zinc to seafood.
"There will be families in Alaska that will have trouble being able to buy the necessities of life -- whether it's food or fuel, medicine -- just because of the loss of income," Livey said.
Testimony from around the state echoed those fears.
"The bottom line is the state is currently positioning itself to be behind the curve," Ketchikan Mayor Bob Weinstein said via phone.
"There's a real sense of urgency that Alaska not sell itself short, for any reason whatsoever," said Senate Majority Leader Johnny Ellis, D-Anchorage.
In her State of the State address to the Legislature, Gov. Sarah Palin said her administration would be pitching projects that serve both state and national needs, such as infrastructure for the gas line.
Testifying before the committee Tuesday, Palin's budget director, Karen Rehfeld, said project choices were based on word the administration first received that projects serving national interest would be more likely to get funding, but that has since changed.
"I think it became very clear that both the new administration and Congress would not be including earmarked projects in the bill and would be looking at formula and grant programs," Rehfeld said.
Sen. Lyman Hoffman, D-Bethel, a co-chair of the committee, said requests to build roads for the pipeline are basically earmarks, and that specific projects for specific communities are critical. That's why he introduced a resolution calling for the state to submit a stimulus package with a wide range of options.
Others want more dialogue with Palin.
"Mr. Chairman, I would highly encourage us as a Senate, as a finance body, that we develop some sort of interface with the administration, so that we can represent with our constituents," Huggins said. "Because I think I know my constituents better than you do."
It looks like lawmakers will get their wish for more communication with the governor. She's scheduled a meeting Wednesday morning with House and Senate leadership.
Legislators have heard from communities around the state, building a project wish list. Kotzebue, for example, wants a deep water port, which will help bring down the cost of diesel fuel. Kodiak wants funding for a fisheries research center.
Hoffman says he believes one of the best uses of the federal money is developing alternative energy projects, which will create jobs and bring relief from high energy costs.
Contact Rhonda McBride at firstname.lastname@example.org