Alaska State Legislature
News from the Senate and House Majorities

Wendy Lindskoog (907) 269-0257
Jerry Ritter (907) 269-0167
716 West 4th Avenue, Suite 510
Anchorage, AK 99501
Actuality Line: 1-800-478-6540

Legislative Leaders Question Governor Knowles’ Spending

For Immediate Release: December 15, 1998 Contact: Wendy Lindskoog at (907) 269-0257.

Anchorage – Prompted by the lowest oil prices * ever, Legislative Leaders Tuesday expressed concern over Governor Knowles’ proposal to increase state spending again while oil revenues continue declining.

"At first glance, the governor’s budget seems disconnected from our state’s financial reality, said Senator Sean Parnell (R-Anchorage), Senate Finance Co-Chair Elect. "Just days ago, oil prices plummeted below $9 per barrel. We expected a smaller budget, one that applied savings and new revenues to closing our billion dollar fiscal gap."

Parnell noted that the governor, in his budget, identified savings of debt service of $40 million, suggested six million in legislative reduction, and announced he will make $15 million in other general fund reductions, which he claims, represents a $61 million reduction in the operating budget.

"The governor’s proposal today, however, shows only a $13 million reduction in his operating budget. That means he is increasing the spending over what we had last year in basic programs by at least $48 million," Parnell said. "We don’t believe the people of Alaska want us to be increasing spending, especially during these times of disastrously low oil prices."

"At the current rate of spending, we could use up our state’s savings account – the Constitutional Budget Reserve – in about four years," said Senator John Torgerson (R-Kasilof), Co-Chair Elect of Senate Finance. "With this deadline looming, it’s hard to understand Knowles’ apparent lack of acknowledgement of the fiscal situation we’re in."

"We share Knowles’ commitment to protect Alaska’s children and improve education, including making good choices now to protect our children’s future," Torgerson said. "We will carefully review the governor’s budget to determine if it meets the State’s future needs, especially the need for long-term financial security."

"A responsible budget doesn’t spend all our savings. It doesn’t spend today at the expense of tomorrow. And, it doesn’t propose expanded programs when we cannot afford the ones we already have," said Representative Gene Therriault (R-North Pole), Co-Chair House Finance.

"We agree with Governor Knowles that our children’s future should not fluctuate with the price of oil," Therriault said. "On the other hand, it doesn’t take low oil prices to ask the question -- How effectively is the administration managing half of the general fund budget currently being spent on education and children’s programs?"

"We added 28 new child protection workers last year to DFYS costing about $1.5 million. It’s government’s responsibility to be accountable for that money," Therriault said. "Before adding another 26 positions, we must first assess whether this additional funding improved the safety of Alaska’s children."

Last year the Majority introduced the concept of Results Based Budgeting. Now, it is imperative that every dollar we appropriate is spent with a definite result in mind. Alaskans deserve that level of accountability.

To address our state’s billion dollar fiscal gap and hold the line on new spending, the majority challenged the governor to immediately:

  1. Revise his fiscal year 2000 budget to make additional real spending cuts.
  2. Ask his departments to "tighten their belts." The legislative majorities suggested he direct his agencies to make further real reductions in fiscal year 1999 spending and present legislation on the first day of session that proposes those specific reductions.

"We realize our current fiscal gap will take more than just budget reductions to close," Torgerson said. "However, we cannot wait to ‘tighten our belts’ while the legislature, the governor and the public writes a plan for the challenges to come."

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