Legislature(2003 - 2004)

2004-09-07 House Journal

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2004-09-07                     House Journal                      Page 4546
HB 375                                                                                            
The following letter dated July 19, 2004 was received:                                              
"Dear Speaker Kott:                                                                                 
On this date I signed with line item vetoes the following bill passed by                            
the second session of the Twenty-third Alaska State Legislature and                                 
am transmitting the engrossed and enrolled copies to the Lieutenant                                 
Governor's Office for permanent filing:                                                             
      CONFERENCE CS FOR HOUSE BILL NO. 375                                                          
      "An Act making appropriations for the operating and loan                                      
      program expenses of state government, for certain programs, and                               
      to capitalize funds; and providing for an effective date."                                    
      Chapter No. 158, SLA 2004                                                                     
      [Effective Date:  See Chapter]                                                                
The Fiscal Year 2005 budget that I proposed last December                                           
represented a $245 million spending reduction from Fiscal Year 2003.                                
To get government back to basics, the administration prioritized state                              

2004-09-07                     House Journal                      Page 4547
services-while saving money-in order to increase investment in                                      
programs that meet the state's traditional responsibilities to citizens.                            
We proposed, and the Legislature agreed, to add 20 Alaska State                                     
Troopers-the largest one-time addition in memory.  Once criminals                                   
have been arrested, we want them off the street.  We proposed, and the                              
Legislature agreed, to add nine criminal prosecutors.  Lack of                                      
commitment to convicting criminals over the last decade left the state                              
without prosecutors to handle the more than 70 percent increase in                                  
felony cases.  This budget adds more prosecutors than in the last ten                               
years combined.                                                                                     
The greatest investment we can make in the growth and diversity of                                  
our economy is to invest in education.  Funding for the K-12 base                                   
student allocation will increase $82 million, bringing the state's                                  
investment in K-12 support to $805 million-35 percent of the state's                                
general fund operating budget.  Another $229 million in state general                               
funds will be invested in the University of Alaska, which represents an                             
increased $16 million investment.  (Funding for K-12 education and                                  
the University were included in FCCS SB 283 (Corrected)).                                           
The Legislature also agreed to invest an additional $12 million to                                  
develop Alaska's natural resources, which are key to Alaska's future.                               
This budget more than doubles the state's investment in the                                         
Department of Natural Resources' work to develop the state's oil and                                
gas.  The additional funding will enable the Division of Oil and Gas in                             
the Department of Natural Resources to further its work on oil and gas                              
lease sales, such as Alaska Peninsula and National Petroleum Reserve-                               
Alaska.  This includes $5.5 million to support the department's work                                
on permitting and processing the stranded gas applications for a future                             
gas pipeline.  This also includes $5.1 million that will be invested in                             
the Department of Revenue's work to bring Alaska's North Slope                                      
natural gas to market.  We have made a lot of progress over the last                                
year in getting Alaska's natural gas to market.  I am confident that with                           
this additional investment we will provide a road map for realizing the                             
value of our North Slope gas both in-state and in the markets beyond                                
our borders.                                                                                        
Just as I did in Fiscal Year 2004, I challenged the Legislature to keep                             
Fiscal Year 2005 spending below the current year and set a goal of not                              
using more than $400 million of the state's reserve funds, or                                       

2004-09-07                     House Journal                      Page 4548
Constitutional Budget Reserve (CBR) to prop up spending.  In terms                                  
of overall spending, the Legislature's approved spending was $17                                    
million higher in general funds over Fiscal Year 2004.  Based on the                                
Department of Revenue's spring forecast, the projected draw from the                                
CBR would have been $371.2 million for Fiscal Year 2005.                                            
I have made $4.3 million in general fund vetoes in the Fiscal Year                                  
2005 operating budget.  Each is discussed below.  Of this amount, $1.2                              
million will come from savings in travel.  These initiatives are part of                            
our on-going effort to improve the state's business practices.  We are                              
not finished with reducing the size of government and remain focused                                
on the state's bottom line.  We are working to ensure the state gets                                
value for every dollar spent and that programs are effective in                                     
delivering results for Alaskans.                                                                    
The following are the vetoes I have made in the Fiscal Year 2005                                    
operating budget:                                                                                   
Department of Community and Economic Development - $138,300                                       
Community Assistance and Economic Development - Community                                           
· Local Boundary Commission staff  - $75,800                                                        
This would have added an additional position to work with the Local                                 
Boundary Commission.  In light of the challenge of trying to balance                                
spending with revenues, the funding for this new position was vetoed.                               
The department will have to re-prioritize its workload to meet other                                
· Alaska Legal Services Corporation grant - $62,500                                                 
The state's support to this non-profit organization has declined over the                           
years.  Providing a grant to an organization that provides legal                                    
assistance to individuals is not a basic responsibility of state                                    
Department of Education and Early Development - $169,400                                          
Alaska Library and Museums                                                                          
· Library Operations - $100,000                                                                     
The Legislature reinstated this reduction that was included in the                                  
administration's proposed budget.  The department continues to                                      

2004-09-07                     House Journal                      Page 4549
believe that management efficiencies can be found within the library's                              
operations without diminishing services to the public.                                              
· Archives - $69,400                                                                                
The Legislature added funding for electronic records management.                                    
The reality of trying to balance the state's budget means that initiatives                          
such as this need to be funded internally by re-prioritizing and finding                            
efficiencies that will free up funding.                                                             
Office of the Governor - $193,000                                                                 
Reductions were spread among three areas:                                                           
· Executive Operations - $75,000                                                                    
· Office of Management and Budget - $50,000                                                         
· Lieutenant Governor - $68,000                                                                     
Each organization will find savings through belt-tightening, which                                  
includes $25,800 in estimated travel savings).                                                      
Section 21-(b) Fund Transfers - $1 million                                                        
· Alaska Marine Highway System Fund - $1 million                                                    
The general fund deposit into the Alaska Marine Highway System                                      
fund was reduced to $31 million.  This reduction was possible due to                                
the savings expected from the recently negotiated contracts with the                                
marine highway unions.  The Legislature also appropriated an                                        
additional $8 million to the fund.  This veto will not result in a                                  
decrease in the level of service.                                                                   
Salary and Benefit Adjustments - $1,015,300                                                       
Section 30-(a) (3) Public Safety Employees Association - $1,015,300                                 
The union members failed to ratify the contract and new contract                                    
terms will be submitted to the next Legislature.  The following                                     
amounts were vetoed:                                                                                
      Department of Public Safety                                                                   
       General Funds $774,500                                                                       
       Federal Funds   $31,600                                                                      
       Other Funds    $30,900                                                                       
      Department of Transportation and Public Facilities/International                              
       Federal Funds     $7,500                                                                     
       Other Funds  $170,800                                                                        

2004-09-07                     House Journal                      Page 4550
Section 3-(b) University of Alaska monetary terms                                                   
Technical veto as this language also appears in section 59(c) of FCCS                               
SB 283 (Corrected).                                                                                 
New Legislation (Section 2, pages 39-41)                                                          
As a result of further analysis, the following fiscal notes were vetoed                             
or reduced.  Departments will accomplish the work in support of the                                 
new legislation within existing budgets:                                                            
· HB 484 - Corrections: Fees/Surcharge - $46,500                                                    
The funding, appropriated to the Department of Law, was for a clerk                                 
to assist with collection of the new fees.  Instead, the department will                            
accomplish the necessary tasks with existing resources and work with                                
the court system to electronically transfer the information.                                        
· SB 65 - Correctional Facility/Personnel - $260,000                                                
This funding, appropriated to the Department of Corrections, was for                                
three project managers for planning and construction of new                                         
correctional facilities.  Regardless of my decision on whether to sign                              
this legislation into law, the department will not need these positions                             
during Fiscal Year 2005.  At this time the administration is not willing                            
to jeopardize the state's debt rating by incurring new state-backed debt                            
to build new facilities.  The administration has been clear that only                               
when a long-term fiscal solution is in place will it support new debt.                              
At that time the necessary project managers can be hired.                                           
· SB 224 - Lower DWI for Minors to .02 - $134,700                                                   
This funding, appropriated to the Department of Administration for the                              
Public Defender Agency, would have funded a new attorney.  The                                      
final version of this legislation imposes a mandatory minimum fine                                  
and community service for juveniles operating a vehicle after                                       
consuming alcohol or refusing to submit to a blood alcohol content                                  
test.  These offenses are already infractions and establishing minimum                              
fines and community service is not expected to cause a substantial                                  
enough increase in the number of cases to warrant an additional                                     
· SB 231 - Decrease Time to Claim Unclaimed Property - $30,000                                      
The funding, appropriated to the Department of Revenue, was reduced                                 
from $60,000.  The department will re-prioritize work performed by                                  

2004-09-07                     House Journal                      Page 4551
existing staff in order to achieve the $30,000 savings and still get the                            
work done.                                                                                          
All Departments - Travel and State Vehicle Savings - $1,280,200                                   
Department budgets were reduced by $375,700 in general funds for                                    
expected savings in travel costs (the University's $250,000 in savings                              
brings the total to $625,700).  Another $904,500 was taken in                                       
anticipated savings from a reduction in the number of state vehicles                                
and improved management of the state's fleet.  There will be no impact                              
on direct services delivered to citizens as a result of these savings.                              
· Travel Savings - $375,700                                                                         
      General fund savings by department are:                                                       
            Administration                                                             $12,000      
            Community and Economic Development                                           $5,000     
            Corrections                                                              $110,000       
            Education and Early Development                                            $10,000      
            Environmental Conservation                                                 $14,300      
            Fish and Game                                                              $17,000      
            Governor's Office                                                          $25,800      
            Health and Social Services                                               $104,900       
            Labor and Workforce Development                                              $3,300     
            Military and Veterans Affairs                                              $25,000      
            Natural Resources                                                          $12,000      
            Public Safety                                                              $26,000      
            Revenue                                                                    $11,200      
            Transportation and Public Facilities                                       $25,000      
(The University of Alaska's savings was taken in FCCS SB 283                                        
(Corrected).  The $25,800 in Governor's office travel is tallied in the                             
earlier summary of reductions for the Office of the Governor.)                                      
· State Vehicle Savings - $904,500                                                                  
General fund savings by department are:                                                             
            Corrections                                                                $65,000      
            Environmental Conservation                                                   $6,500     
            Fish and Game                                                              $10,000      
            Health and Social Services                                                   $5,800     

2004-09-07                     House Journal                      Page 4552
            Labor and Workforce Development                                              $2,200     
            Law                                                                          $4,000     
            Transportation and Public Facilities                                     $811,000       
In spite of the increased level of investment made in key programs                                  
discussed earlier, approved spending from all appropriation measures                                
is basically flat when compared to Fiscal Year 2004.  With the                                      
customary addition of a $12.5 million placeholder for supplemental                                  
spending next session, overall general fund spending after vetoes for                               
Fiscal Year 2005 is $13.5 million higher.  When compared to Fiscal                                  
Year 2003, spending has been reduced by $163 million.  The projected                                
CBR draw, based on the Alaska Department of Revenue's Spring                                        
revenue forecast of $28.30 per barrel, is $360.6 million.                                           
The current high oil prices have given Alaska's finances a slight                                   
reprieve.  For some, it may also have served as political permission to                             
avoid making politically challenging decisions to bring stability and                               
certainty to state finances and public services.  This administration's                             
plan is for the state to live within its means and develop its resource                             
wealth.  This includes managing not only our natural resources but                                  
also our financial resources wisely.                                                                
We need to protect the value of our Permanent Fund for future                                       
generations of Alaskans.  And we need to decide, together as                                        
Alaskans, on the wisest use of the income from the growing fund.  I                                 
have advocated putting dividends first because our economy and                                      
individual Alaskans depend on them.  After dividends are paid, I                                    
believe we should make sure we have enough money for education                                      
and that we provide some assistance to help keep the lights on and                                  
reduce the property tax burden in communities around the state.                                     
I will continue to work with the Legislature and all Alaskans on these                              
financial issues. But we should not let debate over how to manage our                               
bank account take our eye off our job.  Job one is to develop our                                   
resource wealth to provide hope and opportunity for all Alaskans.                                   
Developing our resources is the best way to fund the basic priorities of                            
government-education, public safety, transportation, and public                                     
health-and to grow our Permanent Fund.                                                              

2004-09-07                     House Journal                      Page 4553
To these ends, I look forward to working with the Legislature and                                   
Alaskans on these critical issues.  Alaskans deserve leaders who will                               
take responsibility today for Alaska's tomorrow.                                                    
                                          Sincerely yours,                                          
                                          Frank H. Murkowski