Gov. Sean Parnell on Thursday proposed a $12.1 billion spending package for the next fiscal year, more than $800 million less than this year's budget.

Parnell said his plan shows restraint and should send a message that state spending will not spike just because Alaska has surplus funds. In his budget address in Anchorage, Parnell said he wants a public conversation with the Legislature on wants versus needs.

He said he expects that the budget, in the end, will not exceed what he accepted this year.

Excluding permanent fund appropriations, this year's budget totals $11.4 billion. Parnell cited that figure earlier this year when he vetoed a record of more than $400 million in spending.

With permanent fund appropriations, this year's budget totals about $13 billion, and Parnell's spending proposal for next year is $12.1 billion. He said his budget will leave a surplus of $3.7 billion.