SitNews - Stories in the News - Ketchikan, Alaska


Governor Palin Reduces Current Year Spending
$268.6 million in budget reductions


February 03, 2009

Alaska Governor Sarah Palin submitted a supplemental budget to legislators today that reduces general funds by $268.6 million and seeks authorization to access savings to balance the budget at the end of the fiscal year.

"With changing market conditions and declining oil prices, our state agencies have been working hard to find savings and still provide needed public services," Governor Palin said. "Through savings targets we implemented at the beginning of the fiscal year and by efficiently managing our programs, we have been able to reduce the current budget and minimize supplemental funding. The more we reduce now, the less we will have to draw from savings at the end of the year."

The $268.6 million in reductions will bring the estimated revenue shortfall to $1.36 billion. Legislators will have to authorize the use of reserves or make additional reductions to balance the FY2009 budget.

"FY2009 has been a year of unprecedented revenue volatility," said Palin. "Due to the dramatic decline in oil prices, the estimated revenue of $7.5 billion in the spring 2008 forecast was lowered to $5.5 billion in the January 2009 interim forecast, making responsible reductions necessary."

The FY2009 budget authorized expenditures of $5.99 billion plus savings appropriations of $1.18 billion, for a total of $7.17 billion.

"With the drop in oil prices, it will require reductions in the budget and access to reserves to keep Alaskans employed and the economy moving," Palin added. "I am committed to working with the legislature, as we have over the past two years, to make prudent budget decisions and continue to invest in infrastructure that will help develop our resources and our communities. We will continue to monitor the changing economic conditions and the impact of oil prices in the coming weeks as we work on this, and other appropriation bills this legislative session."

Concerning the $268M reductions announced by Administration, House Finance Committee Co-Chairman Mike Hawker (R-Anchorage) said, "The governor's FY09 Supplemental request is good in that it recognizes the realistic oil price projections for the coming year, averaging approximately $40-bbl through June."

Hawker said, "The apparent reduction of $218 million is real, but we have to look at the components. There's $200 million that reflects lowering the estimate of the amount of oil and gas exploration credits that were going to be paid. That's not a savings. That's really a fact that we're not getting the exploration credits claimed that the administration anticipated were going to be claimed. So that's not a reduction."

"Likewise, there's about a $15 million General Fund reduction in Medicaid authority that was not going to be spent because it was over-authorized." said Hawker.

Hawker said, "You factor those two items and you've got a net-zero supplemental on a general fund basis. In that net zero, the administration has about a $17 million unallocated reduction. They've got to make good on that unallocated reduction in order to hit the net zero target."

House Finance Committee Co-Chairman Hawker said, "I don't think the Finance Committees are going to be comfortable with unallocated reductions. We're going to be looking for a specific statement of policy from the Governor, and where she intends to actually take those reductions as we complete the supplemental budget."

"We've got a very comprehensive and clear listing of transactions from which to begin our work. It's perhaps one of the more open and transparent supplemental budgets we've seen in quite a while," said Hawker


On the Web:

Supplemental bill and more detailed information on the budget
Office of Management & Budget


Sources of News:

Office of the Governor

Office of House Finance Committee Co-Chairman Mike Hawker


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Stories In The News
Ketchikan, Alaska