More budget cuts on way

GOP leaders plan to pursue $250 million in cuts over 5 years

Posted: Wednesday, January 12, 2000

The budget will be cut again this year, but not enough to close Alaska's fiscal gap. That shortfall will remain and probably won't be addressed this year.

Those are among the Republican majority leaders' predictions for this year's legislative session, outlined during a news conference Tuesday.

House and Senate leaders said they will continue a five-year plan to cut $250 million from the state's general fund budget. This is the last year of that plan, and following it will mean about a $30 million cut this year.

But GOP leaders acknowledged that won't take care of a much larger gap between revenues and spending.

Under their budget plan, they'll still need to draw more than $500 million from a state savings account, the Constitutional Budget Reserve, said Rep. Eldon Mulder, co-chairman of the House Finance Committee.

``We have a huge deficit still,'' Mulder, an Anchorage Republican, said today.

Last year's attempt to tackle that fiscal gap - an advisory vote on using a portion of Alaska Permanent Fund earnings to plug the hole - was overwhelmingly rejected by voters.

And, although oil prices have more than doubled since this time last year, the gap between spending and revenues remains, said Senate President Drue Pearce, an Anchorage Republican.

``New revenues'' will have to be part of the equation eventually, she said, but probably not this year. ``I frankly don't expect to see any new taxes passed by this Legislature,'' Pearce said.

Mulder has proposed a school construction bond issue to be placed before voters in the fall. If it passed, it would cost about $60 million to pay back the debt starting next year. That cost would rise in subsequent years.

Mulder was asked how the increased spending reconciled with the majority's plan to cut $30 million this year.

He said the proposal differs from a plan by Democratic Gov. Tony Knowles - which the majority opposes - to increase spending by more than $100 million this year for education and children's programs.

``We're emphasizing infrastructure and building our state through concrete,'' he said. ``Our constituents are pretty smart. They can tell the difference between bricks and mortar and a bureaucrat.''

``We're going to continue to try to hold the line on operational expenditures,'' he said.

Pearce added that the majority hasn't decided yet whether a bond issue will be the way school construction and other state maintenance needs are addressed.

She also said the Legislature likely won't be willing to spend any more money to pay for increased pay and benefits for state workers.

The Legislature also probably won't try again this year to pass a constitutional amendment granting a rural preference for subsistence hunting and fishing.

Alaska's constitution is at odds with federal law on the issue, and that led last fall to the federal takeover of fish management on waters flowing through federal land in Alaska.

Pearce said there still aren't enough votes in the Senate to put a constitutional amendment on the ballot.

Anchorage Sen. Johnny Ellis, the Democratic minority leader in the Senate, said he's disappointed the majority isn't willing to try again to resolve the subsistence issue and isn't proposing a plan to close the budget gap.

Bob King, a spokesman for Democratic Gov. Tony Knowles, echoed those concerns. King also responded to Mulder's comments about spending on construction projects being preferable to spending more on state programs.

``We think children are more important than bricks and mortar,'' said King, referring to the governor's proposal to increase spending for child protection and other education and children's programs.



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