MORTON PLUMB: Thank you, Senator Stevens. And now we'll hear from Speaker of the House, John Harris.

REPRESENTATIVE JOHN HARRIS: Thank you very much. It's my job today to kind of fill you in on where the House Majority intends to go in the next legislative session. Most of you probably don't know because we met in secret. But the House Majority met in Fairbanks about two weeks ago. We really didn't meet in secret. Most people know about it. But we did meet in a group setting to talk about where we'd like to see the House go. And some of the issues that we think are most important for us to deal with on a statewide basis.

And, you know, I guess Senator Stevens talked a little bit about the surplus. And, I've been in the legislature now, this will be my eighth year, and the budget is always one of the biggest concerns that we have. And the biggest task, I guess, that we have is adopting a budget that we think will be sustainable into the future to deal with Alaska's needs.

And I just want to elaborate on that just a little bit. This year's budget that we're dealing with is over $3 billion. About 300 million of that is appropriated for capital. And that's based on an oil price of $38.60 a barrel. That has a projected $100 million surplus built in it. We included increases in education, public safety, health and social services, and other programs. But the three that I mentioned, education, public safety and health are probably the three things that we're going to focus on again this coming year.

This next year's budget could actually grow to over $3.2 billion just in the operating budget alone. It's a small supplemental and a basic capital budget. But - that's a point I'm going to get to in just a second, this means that the price of oil has to be at about $48 a barrel on average.

When I came into the legislature over seven years ago the budget was based on $16.30 a barrel with a much larger volume being created than we have today. And we ended up having to use an average of $22 a barrel to balance the budget. That means we didn't have a surplus, we had a deficit, and we borrowed money from the constitutional budget reserve to pay our way.

Many of you probably are aware the price of oil in those days was down around $9 a barrel for a while. And Alaska had problems. We thought we were going over the cliff. Well, as you know it seems like we get bailed out every time we turn around and the price of oil is higher. But when you consider these figures the legislature will still have to either depend on our good fortune and continued high prices to balance the budget or we'll again have to make some tough choices on which programs require increases. Many people have mentioned those increases. Which programs will be at the current level and which ones will have to be modified or reduced.

The House Majority is committed to a number of issues. I've talked on some of them already. But we'll continue to make education a top priority. I spoke to the University of Alaska Anchorage folks the last couple days and President Hamilton of course has submitted through the board of regents a fairly aggressive university budget which we'll have to consider as well. But education in K through 12, all the way through the university is one of our top priorities.

We need to prepare Alaska's children for the future. We're going to talk a little bit about the TransAlaska gas line or a gas line to somewhere. And that means that all of Alaska's children need to have an opportunity for those jobs. And they can't do it without education. The House Majority again wants to concentrate on boarding schools, home schools, charter schools, distance learning and vocational education as well. We think that those educational opportunities in the state need to be addressed more than they are now, and we, as the House Majority, want to make sure that happens.

Protecting Alaskans. Public safety is an ongoing focus for us as well. I think for most Alaskan it is. Health care, public safety and programs to better the lives of our citizens are essential for the House Majority to concentrate on. We've talked a little bit in the past about oil subsidies or heating subsidies for rural areas. But, you know, the whole state is faced with higher fuel prices and the need to take care of some of our more elderly and senior citizens. So the House Majority can concentrate on that as well. It all takes money.

Again, the House Majority wants to concentrate on families. Families are the fabric of our state. We think that the break up of the family unity is one of the big problems that we have. And to that end the legislature last year passed the Family Rights Act. That's an important issue for us and I would hope it's an important issue for the people of the state of Alaska as well.

We understand that there we may have the benefit of a surplus, but local communities across the state are struggling. Struggling with budget issues and taxpayers in incorporated areas are bearing the financial burden. Senator Stevens talked a little bit about the unincorporated areas dealing with that. We think that by providing local municipal aid to both incorporated and unincorporated areas of the state we can try to help alleviate some of that, and encourage areas to become incorporated, to help themselves.

We are a state rich in resources. Many of you know what they are. Fisheries, mining, timber and oil. This is an organization that helps supports those. And we want to continue to protect the legacy that Alaska has for economic development through its natural resource production and development. We believe, in the House Majority, that that needs to continue and there's certain factions in the state of course would like to see that go away, and we don't want that to happen.

You're going to hear about it often, you have already, and I'm sure there are folks in the audience here that will ask us questions about it, but building a natural gas pipe line in Alaska remains a priority and focus for the House Majority. We want a pipe line that will benefit all Alaskans. And rest assured, that the contract that comes before the legislature, if one does, will only be approved through the House it's the best deal and in the best need of and the best interest of all the people of the state of Alaska.

One thing that all of these issues have in common are jobs. A natural gas pipe line will bring numerous new jobs to Alaska. Education is essential to provide jobs as well. Families are strengthened by jobs and working people have better families usually than those that aren't. So all those things that we've talked about lead to jobs. And we know, the House knows, and I hope that the people of Alaska know that the laws that we pass and the regulations that are in force can have detrimental or very positive effects on the people of the state of Alaska. We don't take that lightly. And to that end we want to be very careful about what laws we do allow to be passed.

In looking to our future, we have to recognize that Alaska's been extremely fortunate to have a windfall of federal dollars coming to our state each year. Our federal delegation brings home billions of dollars. And I introduced my friend, Bill Sharrow, back in the back there, from Congressman Young's office. But we in the House understand that there is a time in Alaska, probably not too far in the distant future, when our longevity in both of those bodies may not be there. And we have to be prepared as a state. We hope that doesn't happen for a long time, but if -- just naturally, we have to be prepared for a day when we may not have as much federal largess coming into the state.

Our point is Alaskans need to be prepared to stand up for themselves. Be prepared to bite the bullet, so to speak, to help offset what may not be a much better life. That's an emphasis that we want to set.

And lastly, I want to finish up with this point. The House Majority intends to try and save half a billion to $750 million into the earnings reserve account of the Permanent Fund. Not to be deposited into the general fund or into the corpus of the Permanent Fund, but in the earnings reserve account for the use of the state if it's needed. But we don't think that this large surplus should be totally squandered. When I say squandered, I don't mean spent on good things like the deferred maintenance Senator Stevens talked about. We in the House believe that's extremely important. Speaker of the House Gail Phillips, sitting down here, was leader of a task force that had just deferred maintenance in the state. The reality is we shouldn't have this deferred maintenance contained in a bill. We should have a program in place that deals with it on a year to year basis and projects out what our most dire needs are and address those initially and kind of work your way through them. Somewhat as the school systems do.

But having said all that, again I just want to go back and finish up by saying Alaska is not out of the woods when it comes to its budget problems. If we were to drop down to $40 a barrel oil, which isn't unreasonable, we would have a major deficit, we wouldn't have a major surplus. And so Alaskans need to be prepared and look at, we think, the possibility that that could happen and not allow the base of our budget to get so extreme that we have to have large income taxes, large sales taxes, or large reductions in our budget which create major problems across the board for all the services that we provide in the state to happen all at one time to offset that. So with that I think both of us will probably take questions. But thank you for your attention today and look forward to your questions. Thank you.