1996-02-12                     Senate Journal                      Page 2382
SB 290                                                                       
SENATE BILL NO. 290 BY THE SENATE 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 Transportation and                 
Finance Committees.                                                            
                                                                               
Governor's transmittal letter dated February 12:                               
                                                                               
Dear President Pearce:                                                         
                                                                               
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           

1996-02-12                     Senate Journal                      Page 2383
SB 290                                                                       
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:                          
                                                                               
	  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.                 
                                                                               
                                                                               

1996-02-12                     Senate Journal                      Page 2384
SB 290                                                                       
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