Hello and thank you for tuning in. I appreciate this opportunity to speak to you with a message from Juneau. Today I will provide you with updates on the budget process and other fiscal indicators.

Governor's FY05 Budget Request

Excluding permanent fund dividends and inflation proofing: $6.15 billion (unduplicated fund sources).

• Major expenditures in budget:
  Education Total = $1.59 billion
     - Education K-12 - $940 million
     - University/Postsecondary - $574 million
     - School Debt Reimbursement - $79 million
  
• Add SB 35 funding of additional $95.3 million brings total to: $1.69 billion
  (roughly 26% of state's budget)
• Public Health & Welfare: $1.59 billion
  (also roughly 26% of state's budget)

Oil Prices

• Anticipated Revenues from oil are up almost $200 million over the Fall 2003 Forecast.
• Current YTD average price of oil: $30.67
• Anticipated total revenues from that price: $1.9 billion
• The Governor based his FY05 budget on a forecast of $24.65 per barrel.
• We expect an upward revision in the forecast this month.
• Every $1 change in the price of oil equates to approximately $62 million.

Constitutional Budget Reserve Fund

• Balance at the end of FY04 projected to be: $1.9 billion
• Projected CBR draw for FY05: $1.5 billion
• These projected balances will probably change upward by $200-$400 million with the Spring 2004 revenue forecast.

Senate Operating Budget Schedule

• The Senate is on track to put out a budget close to the Governor's request, except for the additional funds for education.
• The House has passed its operating budget bill, HB 375, and it should be read across the Senate floor this week.
• This week the Senate Finance Committee heard subcommittee reports on all the agency budgets.
• This week the Senate Finance Committee will adopt the subcommittee reports and order a work draft to replace the House's bill.
• Public testimony will be taken next week, April 13th and 14th.

Amendments to the operating budget will be taken up April 20th and we expect to pass the bill out of committee.

Spending Limit

This week the Senate considered SJR 3 a Constitutional Spending Limit. Senate Joint Resolution 3 would amend Article IX, section 16 of Alaska's Constitution by establishing a new formula for limiting appropriations in a manner that more tightly constrains budget growth than the existing appropriation limit. SJR 3 would limit the growth of state government and force the state to prioritize its needs to ensure that attention is more critically focused. Placing a limit on state spending is a key component of any new long-range plan to ensure Alaska's long-term fiscal health. Unfortunately, after almost 4 hours of debate on the Senate Floor, the SJR 3 failed to pass because it lacked Democratic support. Notice of reconsideration has been given. If SJR were to pass both the Senate and House, it would go before the voters in the next election.

Education Funding

As you know, the Legislature has not resolved education funding. The House passed a bill to increase K-12 funding by $84.5 million, add $15.8 million to the university, and fund another $10 million in capital projects, many in Democrats' districts. The bill required that House Democrats vote to allow access to the state's Constitutional Budget Reserve in order to balance the budget. Senate Republicans have rejected that plan because the capital projects are unnecessary pork. The Senate instead proposed spending $82.1 million on K-12, the same $15.8 million on the university and $7.2 million on rural school projects that top the state's needs list.

With the Senate and House largely in agreement on the principle of increased K-12 funding, a conference committee has been appointed to work try to reach a compromise out the differences between the two proposals. The House on Tuesday appointed three representatives-John Harris, John Coghill, and Beth Kerttula. The Senate on Wednesday appointed three senators-Ben Stevens, Kim Elton and me, Senator Green.

I would love to hear from you on any of these topics or anything else we are working on in the capitol.

For information on legislation I am working on, to read district updates, or to send me an email, please find my office on the internet at www.akrepublicans.org
You can also call the office directly, 907-465-6600 or toll free in state 1-877-465-6601. Please let me know if you would like to be included on my email distribution list for updates from the office.

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