Dear Friends and Neighbors:

Most Alaskans realize we have a fiscal crisis; clearly, it is time to reevaluate and prioritize the needs of our state. The Governor's State of the Budget address is a wake up call for Alaskans. It is the first time in history of the state that the Executive Branch of government has called for a reduction in spending and program elimination.

The Governor also, requested increases in fees, taxes and new revenue sources. The proposed budget sets a direction we need to take to protect our future. It is the legislature's responsibility to review the proposed budget, listen to the people and make some tough decisions. We will not rubber stamp the Governor's budget proposal. Personally, I have some serious reservations about several proposals within the FY 04 budget proposal.

The Republican Majority has recognized our fiscal problems for the past seven years and we have taken action. In FY 97, the majority committed to a five-year fiscal plan that called for a General Fund budget reduction of $250 million, we met that goal. The five-year plan was a good start, but cutting the budget will not get us out of our current deficit. We need to combine further General Fund cuts with the elimination of redundant programs and overall government department realignments to make our state function more efficiently. The Governor's proposed budget plan is consistent with those goals; it is an aggressive plan that cuts $200 mil in FY04.

The total proposed budget for FY04 is $2,167.3 billion with an estimated Constitutional Budget Reserve (CBR) draw of $393 million. In FY03 the budget proposal from the previous administration was $2,444 billion with an estimated CBR draw of $842.7 million, which, if enacted would have diminished our $2.4 billion CBR account by one third. According to the updated fall revenue forecast, our CBR is approximately $2.2 billion today. The time it takes to drain our CBR will be 3 to 5 years depending upon the yearly average price of oil and the amount the Legislature withdraws yearly for use in the budget. The recent increase in the price of oil has extended the life of the CBR from October of 2004 out to approximately 2006.

Since 1993, the State has added 173 new programs and 2,125 new state employees. The Governor's proposed budget plan will eliminate 21 programs and approximately 200 jobs. The functions of many eliminated programs will be transferred to other similar programs and administrative positions that are no longer necessary will be eliminated.

There are many controversial items in the Governor's proposed budget plan. A department-by-department analysis of all of the reductions and eliminations can be found on the state web site at www.gov.state.ak.us, under the Governor’s Overview of FY04 Budget and Investment Plan. Some of the most controversial items in the budget that you have most likely heard about already are:

• Elimination of the Longevity Bonus program (savings $47 million)
• A 25% reduction in Municipal Revenue Sharing/Safe Communities for a savings of $7.4 million. The anticipated impact on the Municipality of Anchorage would be the loss of $4 million in state funding.
• Elimination of the Alaska Science and Technology Foundation and a transfer of $87 million to the general fund.
• Reduction of Learning Opportunity Grants in the amount of $10 million. The Anchorage School District estimates the impact will be the loss of $3.4 million to our district.
• Reduction of Pupil Transportation reimbursement for a savings of $10.7 million. The Anchorage School District estimates that it will see a reduction of $3.4 million in funding.
• Elimination of the Alyeska Correspondence School in order to save $1.2 million and delete 48 positions. The Governor feels that this duplicates other correspondence schools that are run by various school districts around the State.
• A reduction of the reimbursement rate for school debt reimbursement in order to save $6.6 million. The Anchorage School District indicates that the impact to Anchorage will be a reduction of $3.1 million in state funding.
• Elimination of the Community Schools program saving $500,000.
• Closure of the State Chemistry Lab in Juneau, savings $334,000 and eliminating eight full time jobs.
• Various reductions in grants within the Department of Health & Social Services in order to save $6.3 million. These reductions include $1.3 million by eliminating the Human Services Matching Grant program that provides funds to Anchorage and Fairbanks. These funds are matched by the Municipality and the funds are then distributed as grants to various non profits in order to provide services. I am very concerned about this proposals.
• Elimination of all General Community Mental Health grant which will save $600,000.
• Proposed increase in recording fees for recording real estate transaction documents and Uniform Commercial Code filings which will generate some $2.3 million in receipts.
• Increase in motor vehicle registration fees from $34 to $50 and increase for title and lien recording fees, bringing them to $15. This would generate $10.5 million in revenues.
• Increase business license fees from $50 per biennial license period to $400 per biennial license period. This would impact some 70,000 businesses licensed in the state and would generate approximately $6.9 million in revenues. I am concerned that this increase would impact some of the smaller Alaskan businesses and I am working on a tiered system that would have the license fee depend on the gross receipts of the business.
• Increase non-resident big game tag fees for certain species in order to generate an additional $536,700.
• Institute a Wildlife Conservation Pass which would cost $15 and would be charged to all persons age 16 or older who access our public lands or waters through a commercial services provider. Alaskan residents would be exempt. This would generate $8 million in revenue.
• Increase the fee on gaming to 5% of the gross revenue from pull tab operations. This would raise $11.5 million for the state and the charities would be held harmless. In 2001 total receipts from operations exceeded $350 million, of which charities received about $31 million.
• Increase the motor fuel tax from eight cents to twenty cents per gall, raising $41.2 million annually.
• Institute a $10 per tire surcharge on all studded tires. This would be paid at the time of purchase and the merchant would receive 5% of the amount collected for covering expenses. This should raise about $2 million in revenues.

The Legislature now has the task of holding thorough public hearings on the Governor's proposed spending plan. As with any budget plan the devil is in the details. The controversial areas of the budget that contain deep cuts and program elimination will, in some cases, severely affect Alaskans. The Legislature wants to hear from all citizens that have something to say about the plan before decisions are made to approve any part of the Governor's plan; THAT MEANS YOU! Decreasing the size of government is very important to the future of Alaska; the way we do it involves everybody.

The Governor has set up a comments line for people to call him concerning the budget. You may call (907) 465-3982 and leave a voice mail message, or you may e-mail a message to

Your comments are appreciated,

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