2004-01-12                     House Journal                      Page 2302
HB 376                                                                                            
HOUSE BILL NO. 376 by the House Rules Committee by request of                                       
the Governor, entitled:                                                                             
                                                                                                    
    "An Act making capital appropriations and supplemental                                          
    appropriations; capitalizing funds; making other appropriations;                                
    making appropriations under art. IX, sec. 17(c), Constitution of                                
    the State of Alaska; and providing for an effective date."                                      
                                                                                                    
was read the first time and referred to the Finance Committee.                                      

2004-01-12                     House Journal                      Page 2303
The Governor's transmittal letter dated January 9, 2004, follows:                                   
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
The capital budget bill delivered today contains my proposal for the                                
2005 fiscal year.  Overall, the capital budget totals $1.4 billion of                               
which $1.3 billion is federal funds.                                                                
                                                                                                    
As you know, a capital budget is how state government meets its most                                
basic responsibilities to citizens, such as safe transportation                                     
infrastructure and protecting the public's health.  For Fiscal Year 2005,                           
the capital budget proposes to spend $977 million in federal                                        
transportation funds for road, highway, ferry, and airport projects                                 
throughout Alaska.                                                                                  
                                                                                                    
An area of major investment in protecting the public's health is water                              
and sewer projects.  A total of $89 million is proposed for water,                                  
sewer, and solid waste projects.  Of this amount, $62 million is federal                            
funding.  Grants for municipal projects total $8 million and $79                                    
million is proposed for village safe water projects.                                                
                                                                                                    
In comparing the proposed capital budget to the current year, the                                   
overall proposed total spending is $124 million higher.  Spending of                                
general funds has decreased $45 million, while spending of other state                              
funds is down $102 million.  Federal funds have increased $270                                      
million.                                                                                            
                                                                                                    
In addition to maximizing federal funds, the administration is making                               
every effort to identify ways to leverage limited state funds.  Using the                           
bond capacity of state corporations is one way to stretch state dollars,                            
continue to meet traditional responsibilities, and at the same time                                 
prudently save the state's reserves while we work on new revenue                                    
from resource development.                                                                          
                                                                                                    
To this end, the Fiscal Year 2005 budget relies on $100 million in                                  
corporation issued bond proceeds.  The Alaska Housing Finance                                       
Corporation will use its general obligation debt capacity to sell $25                               
million in bonds that primarily will be used to finance water and sewer                             
projects.                                                                                           
                                                                                                    

2004-01-12                     House Journal                      Page 2304
Another $75 million will come from the sale of bonds by the Alaska                                  
Student Loan Corporation (ASLC) as part of a multi-year plan by                                     
which ASLC will repay the state for its initial investment of $300                                  
million in student loan programs.  The proposal reflects its desire to                              
assist the state in bridging the current fiscal gap.  This proposal will                            
have no impact on student loan programs. Additional bond issues are                                 
planned for 2005 and 2006.  ASLC plans to repay the state up to $260                                
million by the end of FY 2007.                                                                      
                                                                                                    
I look forward to working closely with this Legislature to jointly craft                            
a capital budget that efficiently provides Alaska residents essential                               
state services at a cost that the state can afford over the long-term.                              
                                                                                                    
                               Sincerely yours,                                                     
                               /s/                                                                  
                               Frank H. Murkowski                                                   
                                Governor"