Dear Friends and Neighbors:

The House passed an operating budget proposal for FY '2004 on April 10, 2003. The budget proposal adopted by the House was slightly more than Governor Murkowski's budget. In all it spends some $2.3 billion in state general fund and some $6.5 billion in all funds (state general funds, federal funds, and other funds).

The proposed increase in state funding from FY '2003 is approximately $43 million. The biggest increases were in the Department of Health & Social Services (about $25 million), Department of Natural Resources ($13 million), Department of Public Safety (about $1 million), and Debt Services ($34 million). Because of reductions in some areas, the actual increase between the FY 2003 and FY 2004 budgets comes in at the $43 million figure. Many of the increases were driven by increases in formula programs and increased debt service on general bonds approved by voters. At the start of the budget process, we had approximately $240 million of these types of increases. Therefore, we had to cut almost $200 million.

Major changes adopted by the House included:

• Preserving funding for the Longevity Bonus ($45 million)
• Increasing funding for Pupil Transportation ($10.7 million)
• Increasing funding for Learning Opportunity Grants ($9 million)
• Restoring some funding to Independent Living Rehabilitation ($200,000)
• Transferring $27 million in interest money on the Southern Intertie Project from Alaska Industrial Development & Export Authority to the Railbelt Energy Fund (the Governor wanted this transferred to the general fund)

This is just the first step in the process. The operating budget (HB 75) and the mental health budget (HB 76) are now before the Senate for consideration. In addition, other bills introduced by the Governor to increase revenues and reduce programs are not yet in the House budget.

You may access more specific information on the budget by visiting the Legislative Finance Agency's website at: http://www.legfin.state.ak.us/

Best regards,

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