1996-02-12                     House Journal                      Page 2724
HB 500                                                                       
HOUSE BILL NO. 500 by the House Rules Committee by request of                  
the Governor, entitled:                                                        
                                                                               
An Act making capital and other appropriations; and providing                 
for an effective date.                                                         
                                                                               
was read the first time and referred to the Finance Committee.                 
                                                                               
The Governor's transmittal letter, dated February 12, 1996, appears            
below:                                                                         
                                                                               
Dear Speaker Phillips:                                                         
                                                                               
I am pleased to transmit to you my proposed FY97 capital budget, a             
bare bones package of projects to meet basic needs of Alaskans.                
The state general fund level of $110 million for this budget is very           
limited in light of the massive capital needs throughout the state.  But       
I believe it is responsible, given our efforts to close the states budget      
gap.                                                                           
                                                                               
In addition to limited state general funds, this budget maximizes the          
receipt of over $364 million of federal dollars.  Over $280 million in         
federal highway and aviation funds alone are expected this coming              
fiscal year.  Authorizations for new individual federal aid                    
transportation projects will be submitted after the final State                
Transportation Improvement Plan is adopted late this month.  Other             
state resources such as Alaska Housing Finance Corporation and the             
Alaska Industrial Development and Export Authority have been used              
to put forward additional capital dollars for housing and economic             
development projects.                                                          
                                                                               
Although the appropriations bill lists projects in departmental order, I       
have attached a summary of the projects broken into the major                  
categories that reflect my capital budget priorities:                          
                                                                               

1996-02-12                     House Journal                      Page 2725
HB 500                                                                       
		  Education			  Justice                                                      
		  Development		  Transportation                                              
		  University			  Public Support Technology                                   
		  Health and Safety	  Capital Matching Grants                                
						    to Communities                                                     
                                                                               
I have also provided some preliminary information from the six-year            
capital plan that we are developing for presentation to the legislature        
and the public later this winter. I cannot overemphasize the importance        
of a multi-year capital plan for Alaska.  It is an essential budget            
discipline tool that will improve predictability and stability in the          
budget process.  In the past, we have had capital budgets swing from           
$147 million to $616 million and back down again in the space of five          
years.  In-state construction companies and labor forces can not               
effectively meet such widely fluctuating budgets.  Communities can             
not know whether to seriously consider local bonds or private sector           
financing instead of holding out for the possibility of free state             
money.                                                                         
                                                                               
You will see from the summary of total capital needs that we will              
hardly make a dent this year in the list of school construction and            
major maintenance projects, in rural sanitation or in deferred                 
maintenance for state facilities.  To address these larger needs, we are       
analyzing the viability of financing alternatives such as revolving loan       
programs and bonding.  I am proposing one new financing                        
arrangement for this years capital budget: revenue bonds for                   
approximately $6 million in needed technology improvements such as             
the integrated criminal justice data network.  Many of these                   
improvements will help reduce operating costs in future years.                 
                                                                               
Detailed information about the proposed capital projects will be               
provided by the Office of Management and Budget.  I look forward to            
working with you on a responsible capital budget that addresses basic          
needs throughout Alaska.                                                       
                                                                               
							Sincerely,                                                              
							/s/                                                                     
							Tony Knowles                                                            
							Governor