1996-01-12                     Senate Journal                      Page 2118
SB 213                                                                       
SENATE BILL NO. 213 BY THE SENATE 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 Senate Finance                     
Committee.                                                                     
                                                                               
Governors transmittal letter dated January 12:                                 
                                                                               
Dear President Pearce:                                                         
                                                                               
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                     Senate Journal                      Page 2119
SB 213                                                                       
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