Alaska State Legislature
News From The Senate and House Majorities

Wendy Lindskoog (907) 465-4582
Jerry Ritter (907) 465-3804
State Capitol
Juneau, AK 99801
Actuality Line: 1-800-478-6540
http://www.akrepublicans.org

Finance Leaders Advise Caution

For Immediate Release: February 20, 1998 Contact: Senator Drue Pearce at (907) 465-4993 or Rep. Mark Hanley at (907) 465-4939.

Juneau – Plummeting oil prices and the Governor’s requests to add more spending will widen Alaska’s fiscal gap and rapidly deplete the state’s savings account if state officials do not budget with caution according to legislative finance leaders Representative Mark Hanley and Senator Drue Pearce. Hanley and Pearce detailed a recent Cambridge Energy report which projects significantly lower oil prices than previously forecasted.

Hanley noted that since Knowles entered the Governor’s office, he has continually stated his commitment to close the fiscal gap. "Because oil prices have dropped to the lowest level in five years, our revenues are hundreds of millions of dollars lower," said Hanley. "The Governor is proposing $60 million in increased spending in the supplemental and $45 million in increased spending for next year. His requests for over $100 million of additional spending erases previous reductions, and increases the fiscal gap."

"The Governor appears to be making a 180 degree departure from his commitment to close the gap," added Senator Pearce. "The Governor stated on November 6, 1995, ‘Without question, Alaska needs to live within its means. It is irresponsible for us to continue spending our children’s future needs to pay for today’s wants.’"

On Wednesday, oil prices dipped to $12.96 per barrel. Prices have not only dropped for this fiscal year, they are well below the ten year average.

"The Governor would spend $1.3 billion from our savings account in just two budget years," stated Pearce. "The budget put on the table by the administration for fiscal year 1999 was based on an average oil prices of $17.28 dollars a barrel. In its winter 1998 report, Cambridge Energy Research Associates (CERA) predicts that Alaska should expect a mid-case oil price of $13.94."

Hanley said we need to stick to the Legislature’s Five Year Plan to bring state spending in line with revenues.

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