Legislature(1999 - 2000)
1999-02-10 Senate Journal
Full Journal pdf1999-02-10 Senate Journal Page 0208 SB 66 SENATE BILL NO. 66 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: 1999-02-10 Senate Journal Page 0209 SB 66 An Act making a special appropriation from the earnings reserve account of the Alaska permanent fund to the constitutional budget reserve fund; and providing for an effective date. was read the first time and referred to the Finance Committee. Fiscal notes published today from Department of Revenue (2). Governors transmittal letter dated February 9: Dear President Pearce: The greatest threat to Alaska's continued economic good health and the prosperity of Alaska families is our state's $1 billion general fund budget gap. Unattended, this gap between revenues and the cost of public services endangers our economy and the essential services on which Alaskans depend, from troopers and schools to roads and Pioneer Homes. Forecasts for continued low oil prices make it clear the budget gap is not a short-term situation. Fortunately, there appears to be increasing agreement among Alaskans that this is the year to put into place a long-term balanced budget plan that would address this budget gap. While Alaska is well equipped with a large budget reserve to help us make a sensible transition, our window of opportunity will not remain open indefinitely. That's why I've proposed an Alaska Balanced Budget Plan to balance Alaska's budget and put our state on stable, sustainable footing well into the next century. It's based on four simple principles I believe most Alaskans agree on: Balance Alaska's budget on a long-term, sustainable basis in 18 months; Protect and grow the state's savings accounts; Continue to generate a sizable, growing Permanent Fund dividend; and Make no changes to the Alaska Permanent Fund or dividends without a vote of Alaskans. 1999-02-10 Senate Journal Page 0210 SB 66 Together, my Administration and the Legislature have been working on the first essential steps toward a balanced budget: significant budget cuts. That work continues for both this years budget and next. However, most Alaskans have come to realize that balancing the budget with cuts alone would lead to unacceptable levels of education, public safety, resource management and other vital services. The days of budgets fueled almost exclusively by oil are gone; our future budgets will have to include new sources of revenue. Today I am introducing legislation to accomplish the revenue side of my Alaska Balanced Budget Plan. This bill, and its companion bill requiring a statewide advisory vote, would take advantage of the booming investment market with a transfer of $4 billion from the Earnings Reserve Account of the Permanent Fund to the Constitutional Budget Reserve Fund (CBR). The transfer would not touch the principal of the Permanent Fund. By using the Earnings Reserve Account to increase the CBR principal, our budget reserve account can make an estimated 550 million more investment income dollars available annually to help balance the state budget. The other element of the balanced budget plan, an Alaska credit income tax, would provide the final $350 million necessary for a sustainable balanced budget well into the next century. Under this legislation, three things would have to happen before a $4 billion transfer would take place: A determination that there is a sufficient balance in the Earnings Reserve Account after paying for inflation-proofing and dividends; A written finding by the Permanent Fund Board Trustees that the principal of the fund would be fully protected as required by the constitution; and Approval of the public through a special statewide advisory ballot this June. 1999-02-10 Senate Journal Page 0211 SB 66 The mechanics of transferring the $4 billion from the Earnings Reserve to the CBR would be determined by the Permanent Fund Trustees to ensure compliance with the Alaska Constitution state laws and General Accepted Accounting Principles, as well as to minimize transaction costs and disruption of Permanent Fund investment strategies and policies. The three part plan Ive outlined - continued cuts, a $4 billion transfer and Alaska credit income tax - has been on the Internet for review and comment by the public for less than two weeks. Already the web site has been visited more than 3,000 times. I hope that interactive model and this package of legislation will continue to generate lively public discussion. Uncertainty about our states fiscal situation ill serves every Alaskan - our citizens, our communities, Alaska businesses or potential business investors. I believe the public sees this is the right time for leadership and action on a balanced budget. Sincerely, /s/ Tony Knowles Governor