Mr. President, Mr. Speaker, members of the Legislature, distinguished guests, my fellow Alaskans. Nancy and I thank the people of Alaska for providing us yet another opportunity to serve this great State. Thank you for bringing us back home.
Tonight, I am given the pleasure of describing the State of the State, and the State of the Budget for the coming year.
To begin, let me introduce my team in leading the state. First and foremost my wife, Nancy, who in this endeavor, as in all others, has stood by me, counseled me, and supported me. Lieutenant Governor Loren Leman and his wife, Carolyn. It is a real privilege to have this respected legislator on the team. My Cabinet, experienced, dedicated Alaskans, who share the commitment of providing the people of this state the best, public service possible.
Thank you for your commitment to Alaska and its citizens.
(Recognize the Legislature).
Over the past 18 months, I've listened carefully to Alaskans' views on the State of our State: And on election day Alaskans spoke with a loud voice. They voted for leadership, accountability. They wanted a future for our state to be built on a foundation of hard work and on resource wealth. They asked for a government that could learn to live within its means and that will invest in jobs and prosperity.
During the transition period between administrations, Alaskans volunteered their time. Small teams performed full reviews of each department of government. Others hosted town meetings at which nearly 5,000 citizens participated.
From unemployed loggers in Ketchikan, to out-of-work rural Alaskans, to the concerned fishers in Bristol Bay, people said they are looking for State leadership to protect current jobs, and encourage creation of new jobs.
As we gather here tonight, we have the marching orders for this government. They have come in a strong voice from the people: Accountability and a smaller, smarter state government.
Wherever I go, Alaskans tell me they expect state government to tighten its belt and focus on our basic priorities -- education, transportation and public safety. We will do that.
I have asked budget director Cheryl Frasca and her team to build the Fiscal Year 2004 budget to enable the state to meet its traditional responsibilities to citizens.
As part of the OMB process, we are evaluating every service the state now delivers. Our goal is to determine how effective programs are at delivering the results promised. We are committed to this process and committed to working closely with you to ensure departments are performing well.
We all recognize the formidable challenge of putting the state on track to live within its means. Yet it is a challenge the people of Alaska expect us to meet.
The Administration's proposed Fiscal Year 2004 budget will be submitted to the Legislature before March 6th. When you receive our spending plan, we will ask that you view it within the context of a five-year plan. The first year of this plan focuses primarily on working with you to control the spending side of the fiscal gap.
Controlling spending will require unpopular choices. We will be asking all Alaskans to make sacrifices for the mutual long-term good. We simply have to hold the line on state spending.
What is our plan for increasing revenue? In a single word, ''oil.''
Alaskans know that oil production from the North Slope is down to about 1 million barrels a day, which means the pipeline is running at half its capacity.
The good news is that we have renewed the right of way for 30 years and we have 50-100 years of oil.
First, we should look for ways to help the industry enhance recovery from existing and known fields and increase daily oil production. We have met with producers to encourage increased production from heavy oil.
Second, we need more exploration of our oil resources. We can accomplish this by improving access, expanding the drilling window and reducing permitting time.
Then we must actively promote our oil resources to attract new investment from large and small oil companies. This will require statutory and regulatory changes and state investment in infrastructure but I know that working cooperatively together we can make this pay off for Alaskan's future.
I am optimistic about ANWR. We are working with the Alaska Congressional Delegation to open the Coastal Plain of ANWR and to advance the gas line project. Since it will take several years before these projects are producing revenue -- it is critical that we do everything we can to get them underway as soon as possible.
Support is building in Congress.
The President is an outspoken supporter.
And there is growing national support for ANWR as well as for building the gas line.
I've asked Brian Malnak, my former staff director on the Senate Energy Committee, to work with John Katz in our Washington, D.C. office, and with Arctic Power and with Ted, Don and Lisa to help move federal legislation forward.
I want to be sure the state is helping every way it can and I will be asking you to support an ANWR appropriation in our supplemental budget request.
The Gas Pipeline. At the end of the last Congress, there was general agreement on regulatory incentives needed to move the gas pipeline project forward.
Unfortunately, we did not reach agreement on the necessary financial incentives. That's a challenge for this session of Congress and the Bush administration.
But the State must also do its part to provide the regulatory and fiscal certainty necessary to get a gas line project underway. I want to work closely with you to pass a statutory framework for the gas line and then get to work negotiating the details with all of the stakeholders.
We have already met with producers to begin this process.
Gas Pipeline Authority. In November, voters approved Proposition 3, creating the Gas Pipeline Authority. This Administration will appoint the board and seek appropriations for its initial activities.
It would make good sense for this new Gas Pipeline Authority to coordinate its work with community port authorities, owners of the gas, and other proponents of commercializing Alaska's gas.
I will support any economically viable project that will get the State's gas to market.
While oil development is the most important revenue source for the state, our fishing, mining, timber, tourism and agriculture industries provide the bulk of the jobs to Alaskans.
Make no mistake, as you hear my recommendations for revitalizing these industries, I am fully mindful of our obligation to protect our environment.
I am also mindful of the need to consult and work with the people of rural Alaska and regional governments in making changes and implementing development plans.
Jobs in rural Alaska should first be for the people who live there. I've asked Commissioner Edgar Blatchford, Deputy Commissioner Bill Noll, and Director Margy Johnson of our Commerce Department to be aggressive in promoting our resource industries. I also asked that they work with Native Regional Corporations to determine how the state might be able to assist them in developing their resources.
I believe that a close working relationship between the State and the Alaska Native corporations can provide the economic engine for rural Alaska.
Fishing provides more jobs in Alaska than any private industry. However, parts of the fishing industry, particularly the salmon industry, are in trouble.
Here's what we doing about it:
-- First, we need to think ''outside of the can'' and find new markets for our salmon. We need to look at every option. I am even calling on the cruise ship industry to buy our wild Alaska salmon to serve its passengers. We must become more innovative in marketing our wild Alaska salmon. We also need to increase quality control and assist in transporting our fresh, wild salmon to market. We also must aggressively expand our fledgling mariculture industry.
-- Second, we will work with our Congressional Delegation to try to arrange for additional federal purchases of the warehoused canned salmon.
-- Third, I will be meeting with processors and looking for new markets and investments to see how we can reduce the impacts to coastal fishing communities caused by the closure of the Wards Cove operations.
-- Fourth, I've directed staff to gain control of those federal and state dollars that in the past have been doled out to various interest groups. I want these funds directed to where they'll do the most good to revitalize the fishing industry in Alaska.
-- Finally, we will make the most of the opportunity to work with the Congressional Delegation on reauthorization of the Magnuson-Stevens Fisheries Management and Conservation Act. This act has a direct bearing on decisions affecting Alaska fisheries.
Consistent with these actions is our policy for making selections to the Board of Fisheries.
The Board of Fisheries began its meeting earlier this week in Sitka, so I expedited the selection of new members. This allowed them to take their seats at the meeting.
I requested each board member, as a consideration of appointment, adhere to representing the best interests of all Alaska fisheries and affected communities. I want not only a balanced but also an objective Board of Fisheries.
-- That they not side with one gear group, or one fishing group.
-- That they not commit to vote for the interests of, solely commercial ... versus subsistence ... versus sport fish interests, but that they act in the interest of what is best for all Alaskans.
-- And in the best interest of the renewability of our vast fisheries resources.
I intend to apply these same criteria of objectivity and fairness to all board appointees so they do what's best for Alaska and the resource as their priority.
Now to Alaska's mining industry: Mining holds the potential to provide thousands of high-paying jobs to Alaskans but that potential is not being realized.
Permitting problems, lack of infrastructure, and environmental litigation delay development and increase costs.
Other parts of the world do a better job of attracting investment because their costs are lower. We have begun to turn this around by:
-- eliminating redundant permitting requirements;
-- coordinating permits through the large project team concept;
-- and developing infrastructure in our important mining regions.
One example of the latter is the potential for infrastructure support for the Donlin Creek project in Western Alaska. We are seeking the support of the Bush administration for rail extension to Fort Greely to access the new missile defense system.
The rail extension would not only benefit the military, but the mining and agricultural sectors, as well.
Alaska has many promising mineral prospects including the potential for world class mines at Pogo and Kensington.
We intend to do all we can to restore the timber industry in Southeast Alaska. This proud industry, which once supported 4,200 jobs, now provides just 650 jobs.
While we cannot bring back the heyday of timber jobs provided by the integrated pulp and sawmill industries of the 60's and 70's, we can create an atmosphere in which investors are willing to come to Alaska to build plants and create jobs.
Here's our plan to revitalize the timber industry:
-- 1. We will be proactive by intervening in litigation brought by environmental groups against federal timber sales.
-- 2. I have directed my Attorney General to resume the state's suit against the U.S. Forest Service's ''roadless rule.''
-- 3. This lawsuit was brought to prevent the Clinton Administration from imposing that rule in the Tongass, because it violates the promise in ANILCA's ''no more'' clause. We will hold the federal government to its promise of no more wilderness in Alaska, so our timber and other natural resource industries have room to grow.
-- 4. I have asked Under Secretary of Agriculture Mark Rey, who oversees the Forest Service to establish 10-year timber sale contracts in Alaska. This is necessary to encourage investment and provide jobs.
-- 5. I have asked the Forest Service to review and update the 1997 Tongass Land Management Plan, and we encourage an increase in the Allowable Sale Quantity to 360 million board feet per year. This level is necessary to support a sustainable, integrated timber industry.
-- 6. We will work with the Bush Administration to identify lands that we can trade to create a new one million-acre State forest in Southeast Alaska. It is our intent that funds from timber sales be used to support an expanded Alaska Scholars Program.
Agriculture It is clear that farming works in Alaska We have many excellent success stories from the ''Mat Valley'' to Delta Junction, Kenny Lake to the Kenai Peninsula. But, the recent Legislative Budget and Audit report on the division of agriculture pulls no punches in its indictment of the state's failed efforts to promote and assist the farming community.
I will send you a reorganization plan to address these problems. Alaska's farmers can and should continue to provide a significant level of self-sufficiency for Alaska's residents.
Alaska tourism provides countless business opportunities for small business and employment for thousands of Alaskans. With improved access and new world-class destinations our tourism potential is without limits.
One example is the Kennicott/McCarthy area. Why has it taken so long for this area to attract significant tourism?
We should remember that access to Alaska's largest park the Wrangell-St. Elias was first built for mineral exploration, via the Copper River Railroad from the south to Chitina, and to the north, the mining road to Nebesna. We who enjoy the park today are the beneficiaries of our pioneer ancestors who had the grit and the gumption to carve that access out of the wilderness.
Additionally, we need a northern route into the 6 million acre Denali National Park, the state's number one tourist destination.
As we improve our transportation infrastructure, we open new opportunities for this industry and for people of all ages to experience Alaska.
To be successful in revitalizing our resource development and tourism industries, we must remove obstacles over which we have control. In order to streamline the permitting process, I will be laying on the table a combination of Executive Orders and legislation to do the following:
-- First, the Department of Natural Resources will become the lead agency for all State permitting. We will build on the so-called ''large mine project concept'' developed by DNR in 1992 when it considered permits for the Fairbanks Gold project.
The State will provide additional legal and financial support to enable DNR to be the lead agency. I expect DNR to provide the direction to and coordinate with other State agencies to determine the substantive environmental requirements that must be met in order to issue a permit.
As the lead agency, DNR will set a schedule for other agencies to follow in working through the process and will hold those agencies accountable to the timeline.
-- Second, I plan to streamline the Coastal Management Program. We will transfer responsibility for the Alaska Coastal Management Program from the Office of the Governor to DNR.
I am also eliminating the Division of Governmental Coordination in the Office of the Governor in favor of DNR as lead agency. Again, we will work with our coastal communities to insure their interests are protected and we will consult before these transfers are made.
-- Finally, I am transferring the permitting function of the Habitat Division of Fish & Game to DNR in order to consolidate permitting authority.
On many occasions, the Habitat Division has been the sole agency opposing and delaying legitimate projects important to the state. As examples, the Dorothy Lake hydroelectric project, the Ketchikan southeast intertie, and the Juneau golf course.
These steps should substantially reduce the time for the issuance of State permits without impacting substantive environmental requirements.
We will work with the Denali Commission to provide jobs in rural Alaska. A model my administration is currently exploring is the one established by the Northwest Arctic and North Slope Boroughs.
They have partnered together to address economic development in their regions. I encourage other regions to look at this model and identify ways to create synergies with other regions to work with the state to meet the challenges of development together.
This administration recognizes the contribution Alaska Natives and Alaska Native organizations have made to this great state.
As my administration moves forward, I want to convey my commitment to a healthy spirit of cooperation with the Alaska Native community.
As a majority of the state's resource development will take place in rural Alaska, rest assured that rural Alaska will have a seat at the table during the decision-making process.
We are focusing attention on the development of airports, roads and marine transportation. I announced last week a reorganization of DOT to create an Air Division, a Highways Division and a Marine Highway Division.
Our international airports at Anchorage and Fairbanks provide nearly 20,000 jobs. We need to promote these airports as gateways from America to Asia and Europe, for both passengers and for air cargo. We must also promote and enhance our rural airports, so they too can provide a better level of safe travel.
For our highway system there are several projects for which we seek federal funding:
-- 1. The Knik Arm Crossing.This project will open up the west side of Cook Inlet for residential opportunities and improve travel time to the Susitna Valley and points north.
-- 2. The Ketchikan Bridge.It will provide access to the Ketchikan Airport and open up additional economic opportunities on Gravina Island across from Ketchikan.
-- 3. The Juneau Access Project. I've ordered the Draft EIS for this project to be restarted for the soonest possible construction. Other projects include Bradfield Canal road, a road between King Cove and Cold Bay, and road connections to some of the villages in Western Alaska.
I have asked DOT to identify roads that would help promote jobs. We will develop this list through the State Transportation Implementation Plan and work with the Legislature.
Finally, the restructured DOT includes a Marine Highway Division charged with the responsibility to bring fast ferries on line and otherwise improve ferry service to our coastal communities.
All of these initiatives would assist resource development and tourism.
At $23 billion the Permanent Fund is becoming our greatest source of revenue. I propose that we work together to take a fresh look at the Permanent Fund.
In addition to evaluating proposals for fundamental change, I think there are some things we can do now. For years, the State has used the services of money managers from outside Alaska to make investment decisions for the Permanent Fund.
These non-Alaskan investors make millions of dollars a year for handling our accounts. I want to see some of that money come back to Alaska in charitable contributions.
In addition, I'm asking the Permanent Fund board to examine our contracts with these non-Alaskan money managers to see what, if anything, can be done to reduce their fees and thereby increase the profits of the Permanent Fund.
Finally, I ask the board to see to it that we have a dialogue with the major national and international companies in which Alaska's Permanent Fund invests millions of dollars.
I want to hear their ideas on how they can help create jobs in Alaska.
While we want the Permanent Fund to make good investments, there's no reason why we shouldn't direct attention to those companies willing to provide jobs here.
We must be more aggressive in leveraging our investments. I'll be looking for a new Permanent Fund board that shares this principle.
Let's turn to one of my top priorities: education.
My education initiatives will focus on ensuring that each and every child meets academic standards. All children in Alaska deserve a quality education no matter where they live, what their home language is or what their cultural background is.
Our recent trip to Washington, D.C. included a very productive meeting on ''No Child Left Behind,'' with Education Secretary Rodney Paige and the state's Education Commissioner, Shirley Holloway.
We were assured that Alaska's special circumstances would be recognized.
The new ''No Child Left Behind'' law requires us to renew efforts to provide quality education throughout the state.
As you know, under state law, communities that have 10 school-age children or more, must have a school. Of the 509 schools in Alaska, more than 80 have 25 students or less.
The law requires us to send teachers to rural areas who must teach multiple grades and subjects in which they may not have been trained.
Sixty five percent of the teachers in Alaska come from the Lower 48 and rarely are they prepared for life in rural Alaska.
It will be very difficult to meet the requirements of the No Child Left Behind law I support the program and will work to achieve it.
The reality is: Government alone cannot solve all the problems with education. The solution must involve a partnership among community elders, parents, students, and teachers, regional governments and organizations in combination with a strong commitment from State government to advance the quality of education.
Among the education initiatives my administration is taking:
-- First, enhance the opportunities for regional learning centers and distance learning so we have a means to provide an intensive learning experience for students, and for paraprofessionals and teachers who work in the schools.
-- Second, we will build on success stories such as the schools in Galena, Chugach and Nenana.
-- Third, work with community leaders, elders, and parents to stress the importance of the ''No Child Left Behind'' strategy and how it might best be implemented in their schools.
-- Fourth, it is the policy of this Administration to respect parents' rights and their role in furthering the education of their children.
-- Finally, maximize the amount of federal dollars available to assess the progress of school children and to provide resources to improve schools, based on the assessments.
Neither the federal nor State governments can provide for all our citizens' needs. We're fortunate to be a state of generous people.
Many organizations have stepped up to fill the gap of social service needs. I commend them.
But we can and must, do more. I have asked Lieutenant Governor Leman to lead an effort to expand our partnerships with the faith-based community and other charitable organizations.
Ultimately, our success in responding to people's needs will be measured less by new top down social programs than it will be by the contributions that we make as individuals, families, friends, churches or charitable organizations.
The delivery of adequate health care is a real challenge, made more difficult by the escalating costs of Medicaid. I have asked Commissioner Greg O'Claray of the Department of Labor and Workforce Development and Commissioner Joel Gilbertson of the Department of Health and Social Services to work together to ensure we have a sufficient number of qualified health care professionals throughout Alaska.
And I've directed Commissioner Gilbertson to identify strategies to maximize federal and state resources so we can improve the delivery of health care services along with preventative health care strategies.
Alcohol and inhalant abuse remains a problem of enormous proportions today, particularly among young people. Children affected by substance abuse are far less interested in learning and far more prone to suicide, which is another major concern for children in both rural and urban areas.
I will work with the legislature and local communities to protect and nurture our children through:
-- Tough programs to keep harmful substances away from them and expand their learning opportunities.
-- By providing access to counseling, role models and athletics in order to provide hope and activities to occupy their minds and bodies.
Substance abuse is also behind much of the crime, domestic violence and other problems destroying families. I want the state to apply its full resources to assist those communities that have chosen to be dry communities.
I intend this administration to have the reputation of being ''tough on crime.''
Bootleggers of prohibited substances into rural communities are on notice that we will prosecute to the full extent of the law. If you bring liquor into a dry village, you could forfeit your airplane or snowmachine, and you can expect jail sentences and heavy fines.
We will not be passive to criminal conduct anywhere in our state.
I will send to you, as one of my top priorities, a major criminal justice package.Let me give you one example: Self-defense under current law.
Today when two gangs are shooting each other and an innocent bystander is shot -- as happened recently in Anchorage -- no one is charged with the crime because each gang claims it was self-defense. We are going to change that.
If you bring a gun to a fight you will be responsible for the consequences.
Not only do I support our law enforcement officers in their heroic effort to protect the people of Alaska, I will make sure our prosecutors and the criminal justice system have the resources to protect people, especially the most vulnerable among us -- our children.
I am happy to announce tonight the appointment of two of our best prosecutors as district court judges in Anchorage. They are Brian Clark and Jack Smith.
I hope you agree that the team approach we have taken at the department of Corrections is working very well so far.
The enthusiasm and professionalism shown by Commissioner Antrim and his team have been a breath of fresh air.
Employee morale is up, and the public is safer as a result.
We hope to see these kinds of results throughout state government.
I have reorganized the Department of Military and Veteran Affairs to provide for stronger homeland security in the State. This is absolutely necessary given the potential for war with Iraq, which could begin as early as next month.
Security of our pipeline, oil production facilities and oil tanker port is a national concern. I have directed my staff to work with the Department of Justice, the Department of the Interior, Alyeska Pipeline Service Company, and others to make sure the pipeline is secure.
The reorganized Department of Military and Veterans Affairs is critical to our state's security.
We know Alaska's richest resource is our people. I am pleased to recognize one such Alaskan who is with us in the gallery tonight.
Petty Officer 3rd Class Jason Quinn, from the U.S. Coast Guard Air Station on Kodiak, rescued five people from the F/V Galaxy in the Bering Sea.
You may remember this incident from last October. The Galaxy caught fire and was completely engulfed in flames by the time the Coast Guard rescue helicopter arrived.
Petty Officer Quinn was the rescue swimmer on duty that day. Even with burning debris in the water, Quinn jumped in and went to work.
After getting the first two crew members safely aboard the helicopter, Quinn and the third crewman were pulled under by a tangled rescue cable. Quinn was able to quickly untangle the cable and save his life and the life of the third crewman.
By this time, as you can imagine, Petty Officer Quinn was nearing exhaustion. But he re-entered the water and saved the last two crew. And he performed CPR for the 30-minute flight to St. Paul Island.
This rescue mission lasted for more than four hours, following a five-hour training mission.
Petty Officer Quinn is joined by his wife Emily -- as well as the Commander of the 17th Coast Guard District, Admiral Jim Underwood and his wife, Kathi.
Ladies and gentlemen, PO3 Jason Quinn.
We salute all the men and women who guard Alaska's shores, who provide medical services in our communities, fight fires, police our streets and who serve this nation in the active military and national guard. You are our heroes.
Subsistence is an issue that has divided Alaska for too long. It must be resolved.
The federal takeover of our fish and game management is a severe setback in our long battle with the federal government for states' rights and to be able to take responsibility for ourselves.
Many Alaskans have said they supported me on Election Day because they believed I would make the tough decisions and provide leadership.
I intend to provide the leadership necessary to bring Alaskans, rural and urban, to the table prepared to compromise to achieve the following goals:
-- 1. Provide and respect nutritional and cultural needs important to Alaskans, and
-- 2. Regain State control of our fish and game resources.
I have directed the new members of the Board of Game to manage our game resource for maximum sustained yield using the best science available. I have told them to make decisions on sound science and the best game-management principles -- not on politics.
This charge will assure a greater abundance of game resources for our subsistence users. Managing for abundance is the most significant contributing factor in providing the needs of subsistence users. I ask all Alaskans to support this approach.
A special word for the many men and women serving in the military in Alaska and for the many Alaskans serving Outside who now face the very real possibility of being called to serve in a war in Iraq.
''Know that our hearts and prayers are with you and with your loved ones.We are proud of you. Come home safely.''
We've covered a lot of subjects this evening. But we've only touched a few of the many issues before us today. Does Alaska face tough challenges? Of course we do.
From figuring out how we lower the state's appetite for spending, to resolving the subsistence stalemate and countless other challenges in between -- we have our work cut out for us.
But you know, Alaskans have faced far greater challenges -- even crises -- in years past. And we overcame them.
I am pleased to report to you that the state of our state is good.
But Alaskans expect us to work together to make it even better.
And we must not forget that it is not for ourselves it is for the young Alaskans, including those not yet born, counting on us to see that there are the jobs, the opportunities, the quality of life and all the other reasons to make this great state their home as we made it ours.
Our challenge is to lead the way.
We can bring back that enthusiasm, that frontier spirit, the wealth of opportunity and that sense of community that defined Alaska not that long ago.
Working together, this administration, the Legislature, the Alaska Congressional Delegation and all the men and women who live in this wonderful state will ensure a bright future for the next generations.
God bless you and God bless Alaska as we look North To The Future.
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