Pursuant to the authority vested in me by art. III, secs. 1 and 24 of the Alaska Constitution and AS 37.07.080(f) and (g), I have determined that estimated revenues and unrestricted surpluses in the state treasury available for expenditure for the fiscal year ending June 30, 1987 will be insufficient to provide for existing appropriations. I have made this determination after reviewing the June 1986 forecast of state revenues anticipated for the fiscal year ending June 30, 1987, which estimate a fiscal year 1987 shortfall of approximately $850 million. The estimated shortfall in available revenues represents approximately 35 percent of the total amount of existing appropriations for fiscal year 1987.

I conclude that it is in the best interests of the state to withhold expenditure authority for certain appropriations. This reservation of spending authority is necessary to prevent deficit spending which is prohibited unless authorized by law and ratified by the voters pursuant to art. IX, sec. 8 of the Alaska Constitution.

THEREFORE, IT IS ORDERED:

(1) The following appropriations are maintained in their entirety, and may not be considered for purposes of determining the withholding or reservation of expenditure authority required by other provisions of this Order:

(a) appropriations to pay for interest and principal payments on debts obligation of the state issued pursuant to AS 37.15;

(b) appropriations for the following direct cash payments:

(A) General Relief Medical;

(B) General Relief;

(C) Longevity Bonus Grants;

(D) Medicaid;

(E) Aid to Families with Dependent Children;

(F) Adult Public Assistance;

(G) Adult Public Assistance Hold Harmless;

(H) Workers' Compensation Payments to Individuals; and

(I) Supplemental Interim Unemployment Benefits to Individuals;

(c) appropriations for Foster Care, Social Services Block Grant Offset, and the Alaska National Guard Retirement Benefits; and

(d) appropriations for capital projects which match federal receipts.

(2) The Commissioner of Administration is directed to withhold from obligation 10 percent of the following appropriations: Municipal Revenue Sharing; Municipal Assistance; Fisheries Enhancement Tax Receipts; Shared Taxes; Senior Citizens' Tax Relief; School Foundation Program; Secondary Formula Account; School Debt Retirement; Pupil Transportation; Tuition Student Payments; Boarding Home Grants; Youth Detention Education; and Schools for the Handicapped.

(3) The Commissioner of Administration is directed to withhold from obligation 15 percent of those operating or other one-year appropriations not described in secs. 1 and 2 of this Order for all state agencies, including the University of Alaska. The 15 percent reservation of expenditure authority is intended to be an aggregate adjustment for all of the operating and other one-year appropriations for each state agency. The Office of Management and Budget may direct the Commissioner of Administration to withhold from obligation an amount of an appropriation described in this section in an amount other than 15 percent if the aggregate amount withheld among the appropriations for each state agency totals 15 percent. Further, the Office of Management and Budget may, in exceptional circumstances, direct the Commissioner of Administration to withhold an aggregate amount less than 15 percent if necessary to maintain the delivery of essential state services.

(4) The Commissioner of Administration is directed to withhold from obligation 65 percent of all fiscal year 1987 appropriations for capital projects designated by the Office of Management and Budget. The departments of Environmental Conservation, Transportation and Public Facilities, and Education shall estimate the amounts necessary to finance valid obligations incurred during this fiscal year under fiscal year 1987 capital appropriations, and shall manage project expenditures to assure that department-wide expenditures do not exceed 35 percent of all fiscal year 1987 federal Fund capital appropriations. The Office of Management and Budget may direct the Commissioner of Administration to withhold a greater or lesser amount from obligation under an appropriation for a capital project if the aggregate amount of expenditure authority for capital projects withheld pursuant to this Order is approximately ($300) million.

(5) The Office of Management and Budget is directed, to the extent practicable, to solicit the advice and comment of the Legislative Budget and Audit Committee of the Alaska Legislature whenever it exercises discretionary powers conferred by this Order.

(6) The balances of operating and capital appropriations restricted under this Order may not be encumbered or expended unless the Office of Management and Budget approves.

(7) State agencies shall review all encumbrances recorded for existing appropriations to determine if the encumbrance may be removed to create a balance for lapse into the general fund.

(8) Each state agency under my budgetary authority shall modify the financial operating plan for the agency so that the rate of obligation for agency appropriations will be consistent with this Order.

ORDERED this 22 day of August, 1986.

S/S Bill Sheffield                            
Bill Sheffield                                  
Governor of the State of Alaska