1996-01-12                     House Journal                      Page 2426
HB 412                                                                       
HOUSE BILL NO. 412 by the House Rules Committee by request of                  
the Governor, entitled:                                                        
                                                                               
An Act making appropriations for the operating and loan program               
expenses of state government, for certain programs, and to                     
capitalize funds; making appropriations under art. IX, sec. 17(c),             
Constitution of the State of Alaska, from the constitutional budget            
reserve fund; and providing for an effective date.                             
                                                                               
was read the first time and referred to the Finance Committee.                 
                                                                               
The Governors transmittal letter, dated January 12, 1996, appears              
below:                                                                         
                                                                               
Dear Speaker Phillips:                                                         
                                                                               
This year, I am transmitting two appropriations bills for operating and        
loan program expenses for fiscal year 1997.  One is the first separate         
mental health program bill as required by AS 37.14.003 and AS                  
37.14.005. This bill is for all other government operations, including         
the Legislature and Court System budgets prepared by those two                 
branches of government as well as the executive branch budgets for             
which I am responsible.                                                        
                                                                               

1996-01-12                     House Journal                      Page 2427
HB 412                                                                       
In putting together the fiscal year 1997 operating budget, my                  
overriding concern was to provide a safe landing as we make the                
transition toward a balanced budget.  Taken together, the bills                
represent a $40 million or 1.6 percent decrease from current year              
spending from the pure general fund.  Thirty-five million dollars of           
this is in direct expenditure reductions and five million is a shift from      
oil dollars to user payments.  Both reductions help close the fiscal gap.      
My budget meets the states basic responsibilities to its citizens and is       
consistent with the Long Range Financial Planning Commissions                  
recommendations.                                                               
                                                                               
For the first time in decades, the states formula programs (which              
account for 51% of the FY97 operating budget) will not increase,               
thanks to aggressive management efforts, a healthy economy and                 
several proposed budget cuts. Formula programs have historically               
experienced tremendous cost increases due to federal mandates, new             
program activities, growth in the populations being served and                 
inflation.  My 1997 proposed budget for formula programs is actually           
a very small decrease--0.6 percent-- from FY96.  Within this, we have          
fully funded the K-12 education formula. The welfare reform                    
legislation presented to you this week will direct savings from caseload       
reductions to get more people back to work so we can achieve even              
greater savings in the next five years.  The budget proposes income            
limits for eligibility to receive Longevity Bonus payments and reduces         
some programs of state aid to local communities.                               
                                                                               
The challenge of saying no to todays wants so we can say yes to                
our childrens needs will grow more difficult as the state's oil revenues       
decline.  The changes I am proposing are not easy.  They require               
leadership and commitment from Alaskas political leaders.  I stand             
ready to work with you in meeting this challenge.                              
                                                                               
						Sincerely,                                                               
						/s/                                                                      
						Tony Knowles                                                             
						Governor