Palin:
bq. “Our state budget is under control. We have a surplus. And I have protected the taxpayers by vetoing wasteful spending, nearly $500 million in vetoes.”

McCain:

“When I think people compare her experience, background and accomplishments — I mean ethics and lobbying reform in a state that was beset by the influence of special interests, cutting taxes, giving the citizens back money. I mean, she’s got an incredible resume….”

In 1996, the year before Palin took office, Wasilla’s government spent over four million dollars. In Palin’s final budget as mayor, for the fiscal year 2003, Wasilla’s budget had ballooned to over seven million dollars, an increase of 63 percent.

1996 (PDF): Page 158 shows Wasilla’s expenditures as $4,317,947, when capital outlay is subtracted. Capital outlays are expenditures that result in the acquisition of or additions to fixed assets, ie, land acquisition, construction, and similar.

2003 (PDF): Page 115 shows Wasilla’s expenditures as $7,046,325. There were no capital outlays that year to subtract.

The Politico reported:

Palin, who portrays herself as a fiscal conservative, racked up nearly $20 million in long-term debt as mayor of the tiny town of Wasilla — that amounts to $3,000 per resident. She argues that the debt was needed to fund improvements.

Here are Wasilla’s budget reports from the year Palin first took office as mayor and her last year as mayor:

1996 (PDF): There is no debt in the 1996 budget.

2002 (PDF): The city’s outstanding debt of $18,635,000 is detailed on page 126.

The Fairbanks Daily News-Miner reported:, “Despite John McCain’s claim Friday that Palin is a budget-cutter, the governor this year oversaw 6 percent increase in Alaska’s operating and construction budget, fueled by a revised tax structure and skyrocketing crude oil prices.”

In another article The Fairbanks News-Miner reported:

(The) state general fund spending has risen sharply in the 21 months since Palin took office. The budget she signed earlier this year for fiscal 2009 spent $5 billion from the state’s general fund — a 34 percent increase over the budget she proposed for fiscal 2008 not long after taking office.

Spending increases … have been substantial under Palin, who has had a Republican-controlled Legislature to work with. The size of the budget made some of her fellow Republicans in the Legislature nervous, with two House Republicans saying they would have voted against this year’s spending plan had the GOP caucus not had rules in place to punish those who stray from the party on that one key issue.

The Boston Globe reported:

According to an analysis by the legislative finance office, (Alaska’s budget) has increased about 30 percent in two years. The increase figure includes the one-time energy rebate checks but no increases in reserve accounts or any capital expenditures. It also doesn’t include a supplemental appropriation for additional expenditures, which is routine. Last year, the supplemental budget was more than $4 billion, mostly deposits in reserve accounts when revenues continued to pour in at high levels.

….

The revenue and spending boom is likely to continue this fiscal year. The state budget is built on revenue estimates of oil priced at $83 a barrel. While prices have dipped to around the $100-a-barrel mark, the state appears headed for another significant surplus, followed in all likelihood by another large supplemental budget.

The Boston Globe:

… she can accurately claim that her state is in good fiscal health, thanks to an explosion of revenues from state taxes on oil industry profits.

Indeed, in her 20 months in office, Palin’s toughest financial decisions involved dickering with the Legislature on creative ways to spend and salt away the billions of dollars in oil revenues pouring into the state treasury.

At times, Palin has been more economic populist than small-government conservative, partly because of Alaska’s unique government financing system.

With no statewide income or sales tax, Alaska funds about 90 percent of the state budget from royalties and taxes on oil producers. Soaring oil prices and a higher windfall oil profits tax – an increase pushed through by Palin, now the Republican vice presidential nominee – have state coffers overflowing with petrodollars. The Alaska oil industry calculates that its annual payments to the state doubled in a single year to $10.2 billion.

Until a few years ago, the state government struggled financially for years because of low oil prices. But that’s all changed. In the first two budget years under Palin, the state government has stashed almost $6 billion of surplus revenues in various reserve and savings accounts in anticipation of future drops in the price of oil. And the state has allocated another $4 billion over two years for a laundry list of new capital projects, mostly small grants initiated in budget requests by legislators for their districts.

….

When she took office in mid-fiscal year, she actually inherited a surplus from her unpopular predecessor, Frank Murkowski, whom she easily ousted in a three-way 2006 Republican primary. For much of Murkowski’s term, low oil prices stretched the state budget and resulted in budget cuts that angered constituents.
The revenue and spending boom is likely to continue this fiscal year. The state budget is built on revenue estimates of oil priced at $83 a barrel. While prices have dipped to around the $100-a-barrel mark, the state appears headed for another significant surplus, followed in all likelihood by another large supplemental budget.

The Fairbanks News-Miner reported:

Palin, in her convention speech, said “I have protected the taxpayers by vetoing wasteful spending: nearly half a billion dollars in vetoes.”

The Boston Globe reported the vetoes were of about 10% of the proposed capital items budget submitted by the Legislature. It said some of the cuts may have come because Palin did not offer legislators guidance on the budget:

That was roughly 10 percent of the amount sought by the Legislature, mostly for small projects and grants, and lawmakers complained that Palin gave them no guidance in advance and then blindsided them with her vetoes. Three legislative leaders did not return calls from the Globe seeking comment on the governor’s performance.

….

What Palin does not mention is that she later approved more than $60 million of those once-vetoed projects when they were resubmitted by the Legislature and she let stand hundreds of others.

By contrast, in two budget cycles, Palin has vetoed a total of only $2.6 million in spending requests for the state’s now $8.1 billion annual operating budget, which, according to an analysis by the legislative finance office, has increased about 30 percent in two years.

John McCain claimed that Palin as governor cut $500 million in earmarks. Palin did cut $500 million from the state budget, but those were capital requests, not earmarks. See our section on that here.