Governor announces budget

WASILLA -- Gov. Frank Murkowski announced his signing of the state's 2005 capital, operating and mental-health budgets at the Greater Wasilla Chamber of Commerce meeting Tuesday, and said the $7.6 billion budget funds essential services while cutting excess.

In his presentation to about 170 area residents, state employees and members of the press, Murkowski touted plans for continued economic development around the state. He mentioned projects such as extending the Alaska Railroad to Delta and adding 25 new positions in the Department of Natural Resources' Division of Oil and Gas to find new areas for potential oil production.

"We do have a fiscal plan, and it's simple," Murkowski said. "It's to live within our means and develop our resources in a wise manner."

But Murkowski said despite increased by-barrel oil prices, he's not satisfied the state is on firm financial footing. He sliced from several areas of the budget, including a $700,000 grant earmarked for the Alaska Travel Industry Association, and has placed a moratorium on new state bonds until, he said, new sources of revenue are put in place by the legislature.

"The governor's number-one concern is that regulatory agencies have actually advised us that, with no long-term solution in place, the state's bond rating could go down," said Office of Management and Budget Director Cheryl Frasca, who also attended the Wasilla meeting.

That directive, Frasca said, will hold in limbo three project-planner positions funded under Senate Bill 65, a bill to evaluate whether to expand public prisons or build one privately operated prison in Whitter, and then work toward construction.

"I do not believe the state should incur additional debt that the credit-rating agencies have suggested will result in a credit downgrade and increased cost to our communities without first identifying a long-term fiscal solution," Murkowski wrote to Mat-Su Borough Mayor Tim Anderson, in response to a letter from Anderson requesting that SB 65 be signed. "I have requested additional information from the Department of Revenue regarding whether the flexibility contained in the bill will be enough to avoid a negative reaction by our credit agencies."

The bill, as of press time Thursday morning, had not been signed into law by Murkowski, and Thursday was the final date for possible action on the bill. Frasca said if the governor signs the bill, it doesn't appear the process of building or expanding prisons in Alaska will be delayed in the long run.

Although Mat-Su Borough officials were still hoping Tuesday that the governor would sign the bill, Borough Manager John Duffy said he's not concerned that the moratorium on bonds will delay prison expansions in the Mat-Su -- if expansion of existing public prisons is deemed the most cost-effective way to increase Alaska's prison capacity.

A study must be completed before any construction begins, Duffy said, and the borough may share a role in completing that analysis. Duffy will attend a meeting with Alaska Department of Corrections Commissioner Marc Antrim Monday, he said, and he expects the state will ask the borough to share in the cost of the study, now estimated at $300,000.

With all the other work the borough is involved in this summer -- construction at Port MacKenzie, negotiating an agreement with JL Properties regarding construction at Hatcher Pass and several other projects -- Duffy said the borough will be plenty busy.

"As long as we move forward with getting that study completed, we think we're going to be on the right track," Duffy said.

Frasca said although the governor cut $5.2 million in expenses, few of those cuts will be noticed by Alaskans. Most of the cuts were made by returning departmental budgets to last year's levels, cutting travel budgets and simply better asset management, Frasca said.

What will be felt more, Murkowski said, are a few key increases the legislature agreed to, which he kept in the budget. An additional $82 million for K-12 education -- an increase of more than $400 per student in Alaska -- will likely be the most noticed, along with an increase of $15.8 million to the University of Alaska budget, funding for 20 new Alaska State Trooper positions and for new social workers and prosecutors throughout the state. In all, the budget grew by $14 million over last year's, Murkowski said.

"This budget moves Alaska forward in the right direction," Murkowski said.