Senator Torgerson's Response to the Governor's State of the Budget Speech
January, 15, 1998

by Senator John Torgerson

Good Evening, my name is John Torgerson.

Its a pleasure to be here with Representative Hanley to make a few remarks about the Republican Majority's approach to this year's budget.

3 years ago, we made a commitment to Alaska to close the State's Fiscal Gap in 5 years and it's the Majority's intent to continue on that course.

We are all aware of the recent drop in oil prices.

Because of Alaska's dependency on the global economy, our revenues are affected by world-wide events, such as:

• The oil for food arrangement with Iraq,,
• OPEC's oil production increase, and the
• Unstable Asian markets that impact demand for oil in those countries.

Additionally in Alaska, we have been experiencing

• a significant drop in gold prices, and
• region wide economic disasters in both our fishing and timber industries.
• These global conditions heavily influence our State's economic health.
• They mandate more budget discipline, not less.

Budget discipline works better when everyone involved acknowledges the need to apply it.

• The Majority's 5 year plan is taking the State in the right direction.
• Today, the Republican Leadership invited Governor Knowles to participate in a bi-partisan revenue summit to talk about the State's economic situation.
• But, we want to caution the Governor now: taking the fiscal responsibility is neither fun or easy.
• But working together at the state level and working with our local municipalities to bring our state spending down to equal our income level would certainly be in the best interest of all Alaskans..

I'd like to quote the final paragraph in the letter the Legislative Leadership sent to the Governor:

"We encourage you to work with our legislative leadership to develop a revenue plan and state budget process based on fiscal reality and long term success, so that future generations of Alaskans may inherit a more stable, efficient, and less costly state government.

Next week the Finance Committees will be receiving updates from both

• our chief state oil economist, and
• an international petroleum research group

Following that, Senate Finance will be discussing its program priorities for next year and taking a close look at how the money has been spent on state programs and services.

With our resources declining, we must account for every dollar and every dollar must count.

We will be asking our program managers to tell us how they measure the success of their programs to determine their efficiencies.

In this environment, we cannot expand programs and increase budgets if the Departments can not show the results.

Essentially, we will be asking the Departments

• to prove their performance, and
• to justify and show where the money is going.

Out of this process we expect to find programs that require new direction based upon expected outcomes.

Long term financial health of Alaska is dependent on taking fiscal responsibility.