Alaska State Legislature

News From The Senate and House Majorities

Ken Freeman (907) 465-3804
Wendy Lindskoog (907) 465-4582
State Capitol
Juneau, AK 99801
web site: http://www.akrepublicans.org
Actuality line: 1-800-478-6540

Republican-Led Majority Reduces State Spending $62.8 Million

Meets Year-Two Goal of Five-Year Plan

For Immediate Release: May 11, 1997 Contact: Ken Freeman (907) 465-3804 or Wendy Lindskoog (907) 465-4582

JUNEAU - A $62.8 million spending reduction topped the list of accomplishments outlined by Legislative leaders Sunday. The Republican-Led Majority announced they have achieved their goal of reducing state government spending for the next fiscal year while funding top priorities of Alaskans.

"Our Commitment to Alaskans is to make government smaller and smarter with only a 2.6% cut to state general fund spending," said Senate Finance Co-Chair Drue Pearce. "We kept our promise to downsize government and make it more efficient and effective."

House Finance Co-Chair Mark Hanley said majority priorities in the $612 million capital budget remain similar to last year; matching federal funds, deferred maintenance, state highway and aviation projects and water and sewer improvements statewide.

Hanley noted that the Village Safe Water program received funding for projects in 37 communities across the state and 24 of these communities have been identified as having the high potential for serious health risks due to water borne disease. Total funding for water and sewer exceeds $90 million dollars.

"We made it clear at the beginning of session we would not leave Juneau without reducing spending by $60 million," said Senator Pearce. "I appreciate the hard work and cooperation shown by the House and Senate Finance Committee and the cooperation of the Minority members of the Conference Committee."

The House and Senate majorities chose as their spending priorities education, public safety, and highway maintenance.

"With regard to the operating budget, we have been able to make reductions while maintaining the priority of public safety. We funded more Alaska State Troopers, more public village safety officers and more prosecutors. We placed a high priority on public safety because we believe it is essential," said Rep. Hanley.

"Education spending increased by 2%. Savings realized by school districts from the PERS contribution reduction will increase classroom spending statewide by another $5 million. In the Department of Transportation we have an additional $2 million over the governor's request to plow roads faster and fix more potholes. It's simple, but important!" said Pearce. "This should result in noticeable improvement in the conditions of our roads," said Pearce.

"Just like last year, the Governor wants to spend more. We held the line," said Hanley. "In the final days of negotiations, the Governor continued to demand increased spending - we said, No!"

Pearce said the Governor wants to spend money the state doesn't have.

"Less than 24 hours before we adjourned, the governor was still asking us to increase state spending by more than $16 million. I consider the Permanent Fund to be the people's savings account. We've put nearly $700 million into the Permanent Fund and our budget needs only $163.8 of Constitutional Budget Reserve (CBR) money to balance. Earnings on the CBR are expected to be $235.7. So our savings account will have a net increase of nearly $72 million," said Pearce.

"Due to the hard work and persistence of Representative Bill Hudson (R-Juneau), the public employee contracts were funded, while still meeting our $60 million in reductions," said House Speaker Gail Phillips.

"We made some tough decisions, had some good luck, and met our goal. Despite some windfalls, the Legislature curbed spending. This long-term discipline will literally pay dividends for future generations," said Hanley.

In addition to reduced spending, a $70 million AHFC dividend, and a $16 million AIDEA dividend have all been deposited into the general fund to further close the gap in spending. "This is perhaps one of our greatest accomplishment this session. The usual tendency of legislatures is to spend windfalls. We've saved them for future generations," said Hanley.

The largest portion of the spending reduction was $25 million less spending in state agencies. "We debated cuts for over two months. After significant public comment, some reductions were restored, some were increased. I am satisfied that these reductions are reasoned and as fair as possible. No cut, however, was easy to make," said Hanley.

The operating and capital budgets include $60 million in cuts as called for in the second year of the Five-Year strategy to cut $250 million.

Senator Pearce noted that the other major portion of the reduction package was achieved through lower debt service payments.

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