2009-02-04                     House Journal                      Page 0163
HB 113                                                                                                                        
HOUSE BILL NO. 113 by the House Rules Committee by request of                                                                   
the Governor, entitled:                                                                                                         
                                                                                                                                
     "An Act making supplemental appropriations, capital                                                                        
     appropriations, and other appropriations; amending                                                                         
     appropriations; making appropriations 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 Finance Committee.                                                                  
                                                                                                                                
A spreadsheet from the Office of the Governor, Office of Management                                                             
and Budget, pertaining to the supplemental requests accompanied the                                                             
governor's transmittal letter and is on file in the Chief Clerk's office.                                                       
                                                                                                                                
The Governor's transmittal letter dated February 2, 2009, follows:                                                              
                                                                                                                                
"Dear Speaker Chenault:                                                                                                         
                                                                                                                                
I am transmitting to you today a supplemental appropriation bill for                                                            
Fiscal Year 2009 that reduces demand on the general fund by $268.6                                                              
million and seeks your authorization to access the Constitutional                                                               
Budget Reserve Fund at the end of the fiscal year to balance the                                                                
FY2009 operating and capital budgets.                                                                                           
                                                                                                                                
FY2009 has been a year of unprecedented revenue volatility.  Due to                                                             
the dramatic decline in oil prices, the estimated revenue of $7.5 billion                                                       
in the Spring 2008 forecast was lowered to $5.5 billion in the January                                                          
2009 interim forecast, making responsible reductions necessary.  The                                                            
FY2009 budget authorized expenditures of $5.99 billion plus the                                                                 
savings appropriation of $1.18 billion totaling $7.17 billion.  The                                                             
$268.6 million in reductions will bring the estimated revenue shortfall                                                         
to $1.36 billion in FY2009.                                                                                                     
                                                                                                                                

2009-02-04                     House Journal                      Page 0164
As you know, we have already taken steps to reduce general funding                                                              
spending.  Even when oil prices were near their highest last summer, I                                                          
implemented a $20 million savings target for state agencies to manage                                                           
their budgets for efficiencies and achieve lower levels of spending in                                                          
the current year.  We have also implemented a hiring freeze and                                                                 
instructed departments to restrict purchases - again, as a management                                                           
tool to help achieve more savings in the current year.  The more we                                                             
reduce now, the less we will have to draw from savings at the end of                                                            
the year.                                                                                                                       
                                                                                                                                
                                                                                                                                
Because of these efforts, we have minimized the supplemental need by                                                            
eliminating the $50 million proposed for supplemental requests,                                                                 
reducing other expenditures, and reappropriating balances to minimize                                                           
current year funding needs.  In addition, we are reducing the                                                                   
authorization for tax credits by $200 million - due only to the timing                                                          
and payment of tax credits.  We are seeing an increase in oil and gas                                                           
exploration and this new tax credit program has served us well.                                                                 
                                                                                                                                
We will continue to monitor the changing economic conditions and the                                                            
impact on oil prices in the coming weeks as we continue to work on                                                              
this, and other appropriation bills this session.                                                                               
                                                                                                                                
When oil prices and state revenue were on the rise, we worked                                                                   
together to build our reserves.  Working together we can keep our                                                               
economy on a steady, confident course - with discipline - to protect                                                            
our reserves and promote economic growth.  Thank you for your                                                                   
consideration of this legislation.                                                                                              
                                                                                                                                
                               Sincerely,                                                                                      
                                 /s/                                                                                            
                               Sarah Palin                                                                                     
                                Governor"