Legislature(1999 - 2000)
1999-02-12 Senate Journal
Full Journal pdf1999-02-12 Senate Journal Page 0239 SB 72 SENATE BILL NO. 72 BY THE SENATE RULES COMMITTEE BY REQUEST OF THE GOVERNOR, entitled: An Act making and amending 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. Governors transmittal letter dated February 10: Dear President Pearce: In 1990, Alaska voters created the Constitutional Budget Reserve (CBR) to cushion state services and the state's economy from some of the effects of oil price volatility. Since then, state budgets have included a provision authorizing use of this oil volatility reserve if general funds are not adequate for the budget levels appropriated by the Legislature. Until last year, there was no specified limit on the dollar amount that could be drawn for this purpose since no one can predict oil prices with certainty. Most years, we have needed far less CBR funds than anticipated when the budgets were passed. 1999-02-12 Senate Journal Page 0240 SB 72 The FY99 budget bill differed from prior years because it contained a $700,000,001 cap on the use of CBR funds. When the budget was passed last May, the Department of Revenue's spring oil price forecast for FY99 was $15.32, and the CBR draw was estimated to be $685 million. If oil had stayed as forecast, the $700 million cap on a CBR draw would not have affected budget levels set by the Legislature. The Department of Revenue's most recent forecast predicts an annual oil price of $11.58. If that price holds during the remaining four months of the fiscal year, general fund revenues will have to be supplemented with an estimated $1.2 billion from the CBR. The bill I am introducing today removes the specific limit on the amount of CBR funds to ensure we can continue to meet the expenditures authorized by the Legislature in this year's budget. Because no one can say exactly how much will be needed between now and June 30, a CBR limit with a revised specific dollar amount could result in another similar problem later in the fiscal year, possibly even after the Legislature has adjourned. Whether or not there is a limit on the CBR draw, agencies cannot expend more than the amount appropriated by the Legislature. This bill also corrects an inadvertent oversight from May when the CBR management fees did not come up for a separate CBR vote. I urge your prompt passage of this bill so we can resolve the issue before incurring cash flow problems at the beginning of March. Sincerely, /s/ Tony Knowles Governor