The governor's plan to increase spending came in for the heaviest criticism.

"When you're in a hole, the first thing you do is stop digging," said Senate President Rick Halford, R-Chugiak. "It simply doesn't make sense for the governor to dramatically increase spending when we're facing a $1 billion deficit."

House Speaker Brian Porter said, "I'd like to tell you I support every part of the governor's speech, but I can't. The very first thing he mentioned was increased spending, and that is the very first thing Alaskans tell us they want to curtail."

Porter, R-Anchorage, also said he was disappointed the governor didn't include a proposal involving Alaska Permanent Fund earnings. The fund was created to help sustain public services when oil production declined, he said.

Porter also said that he supported a personal income tax, but he was sure a majority of the House Republicans did not.

House Finance Committee co-chairman Rep. Eldon Mulder challenged the governor's figures on a proposed $180 million increase in the state operating budget. Mulder, R-Anchorage, said his tally showed the increases really amount to $300 million in increased general fund spending.

Knowles has proposed about $190 million in new social services and education spending, $55 million for Medicaid and $47 million in his homeland security initiative, Mulder said.

When combined with expected requests for supplementals to the budget, the increases will hit $300 million, he said.

"Proposing $400 million in new revenues and $300 million in new spending only nets $100 million," Mulder said. "It doesn't get you very far," in addressing the fiscal gap.

Senate Finance Committee co-chairman Dave Donley, R-Anchorage, said 26 states have responded to projected budget deficits by "implementing well-constructed budget reductions and by setting priorities for state services."

Donley urged Knowles to instruct state agencies to prepare contingency plans for reduced budgets.