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Don Smith
Anchorage, AK
Dec. 17, 2003

Governor Proposes FY 05 Budget

Taking Responsibility Today for Alaska's Tomorrow

(Anchorage) -- Governor Frank H. Murkowski today submitted his FY2005 budget to the Legislature, noting that it is a policy-driven document, and includes his two broad fiscal targets of reducing the rate of growth in government and keeping the projected draw on the Constitutional Budget Reserve under $400 million.

"Our FY05 budget has absorbed more than $150 million in formula and other program increases, yet has kept general fund and other state spending $170 million below last year," Murkowski said. "The emphasis you see here is on budget priorities that reflect policy priorities, while making spending reductions."

"A state budget is not just about managing state finances," he said. "It is a plan for responding to the needs and hopes of all our people. It's about our education system, the needs of our citizens, our communities, and the protection of our people. It's about roads, jobs, the economy and more. It affects every single Alaskan - man, woman, and child.

"My commitment to Alaska is to reduce the size of state government, to re-emphasize the Alaskan ideal of individual responsibility, grow our economy, build state revenues by encouraging private investment without an income tax, and make government more transparent and accountable."

The Governor's budget invests additional dollars to fight and reduce crime, protect at-risk children, and pursue his administration's resource development plan. The proposal adds 20 new state troopers, mainly in rural areas. It provides for six new prosecutors, six new public defenders, and nine new civil attorneys. In response to a federal audit of two years ago, the budget funds 14 new social workers and seven social worker associates in the Office of Children Services.

The budget funds K-12 education at the level required by the foundation formula, increases state reimbursement for local school construction debt by $13 million, and adds $500,000 to the pupil transportation grant program. Murkowski has also proposed a 5 percent increase in the budget of the University of Alaska, for Board of Regents' priorities.

His budget adds 13 new positions in the Division of Oil and Gas, reflecting his commitment to resource development that can result in significant new revenues to the state. "Generating economic growth and jobs are key components of our economic plan," Murkowski said. "Alaska has 22 percent of the nation's known oil reserves and 19 percent of its known natural gas. It is absolutely imperative that we invest in the Department of Natural Resources at this critical stage to make the gas pipeline a reality and to develop oil and gas resources on the Alaska Peninsula."

In his capital budget, Murkowski has proposed a funding level of $1.4 billion, of which $1.3 billion would be federal funds. State matching funds will come primarily from bond sale proceeds and state corporation contributions.

"It is imperative that we extend the CBR through the time when new revenue from resource development kicks in, and tapping the equity in other assets and public corporations is one way to do that," Murkowski said.

Major new sources of revenue contemplated by the proposal include a transient accommodations fee (an overnight fee that would also apply to cruise ship passengers), raising $32 million, and a $1 per pack increase in the price of cigarettes, raising $35.5 million. Other proposals would levy a fee on cruise ship gambling for $3 million, increase the state's take on pull-tabs by $2 million, and put a fee on shore-side, guided tour activities for $5 million. Each of these is still a work in progress at the staff level, and is subject to change before being presented to the Legislature.

In total, spending from the state general fund and other state fund sources drops by $170 million from FY04, while federal funds are projected to go up by $242 million. "We expect an increase in federal funds, driven mainly by major construction projects, but state funds are lower in this budget," Murkowski said.

The budget reflects work done over the past year in reviewing and auditing the activitiesand programs of every department of state government, based on the missions and measures initiative begun by the Legislature several years ago. "Under the direction of OMB, each department reviewed its activities and compared those activities with what the law requires and with this administration's policies," Murkowski said. "This is the first time in 27 years that this type of systematic review of the departments has been done."

To look at proposed legislation.


The Alaska "Digest" Newspaper is available on our Web Site.

Don Smith

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