November 22, 2006
Wednesday

Tuesday Alaska Governor Frank H. Murkowski, along with Office of Management & Budget Director Cheryl Frasca, announced that the administration has transmitted its FY 08 budget recommendations to Governor-elect Sarah Palin's transition team. Ms. Frasca also broke down the preliminary revenue forecast from the Department of Revenue, which highlighted an increase in state revenue thanks to the new Petroleum Production Tax (PPT) and higher oil prices.

"The PPT has increased our financial footing dramatically," Murkowski said. "When you see surpluses - even for the current fiscal year - in the billions of dollars you realize the impact of the oil market on revenues to the state. It cannot be understated: Our administration's action to change the oil taxation structure has left the incoming administration in an extremely better situation than the one we faced four short years ago."

The Department of Revenue's preliminary forecast, to be finalized for release in early December, shows an additional $1.5 billion more for the current fiscal year and an additional $1.4 billion for FY 08 when compared to its forecast last spring. Of those amounts, $1.9 billion is the result of enacting PPT.

"The Governor-elect and her team will be able to hit the ground running as it finalizes a budget," Frasca said. "Where as, when we came into office in December of '02, we were staring at a $500 million deficit for FY 03 and another $800 million deficit projected for FY 04.

The recommendations for the current year surplus include:

• $212 million to forward fund K-12 education for FY 08, which would fund education at its current formula level
• $463.4 million to pay FY 08 increased retirement system costs for the State of Alaska, school districts and local governments
• $114.1 million for capital projects, including deferred maintenance projects and the "Connect Anchorage" transportation initiative

The governor recommends the remaining balance of $561 million be used to pay down the PERS/TRS unfunded liability. For FY 08, the governor also proposed a capital budget of $501 million that funds a number of state priorities and long-range goals.

"While the projected surpluses are substantial and not to be down-played, it is still necessary to keep the focus on finalizing a natural gas pipeline contract," Murkowski said. "We cannot delay. The revenues we are seeing today could evaporate if we continue to defer a resolution on a gas pipeline. It is necessary to build off of these assumptions: declining oil production, fluctuating market prices for oil and a growing demand for natural gas. Alaska must be positioned to take advantage and switch the State's financial future from one based on oil to one based on gas.

"Our administration has laid significant groundwork for keeping the revenue cycle going with PPT, aggregating Prudhoe Bay and incentivizing investment," Murkowski said. "It is up to Governor-elect Palin to keep the engine of our economy humming and we wish her our best."

Related:

• FY07 and FY08 Capital Budget Recommendation
• Gov. Murkowski's FY 2007 Spending Recommendations
• Revenue Outlook - FY07-FY08

Source of News:

Office of the Governor
www.gov.state.ak.us

 

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