The governor after a year

Murkowski enters 2nd year with plans for more cuts, consolidations

Posted: Monday, January 12, 2004

Gov. Frank Murkowski, Alaska's tenth governor, served a tumultuous first year in office, cutting state government, reducing the state's fiscal gap and pushing for resource development.

His administration eliminated 88 state jobs in 2003 and has proposed cutting 115 more this year. He consolidated governmental agencies on in funding for programs such as the Longevity Bonus, which paid checks of up to $250 to eligible seniors. His belt-tightening and cuts limited the draw on the state savings account, the Constitutional Budget Reserve, to under $400 million.

In mid-December, he laid out his 2005 budget proposal, calling for taxes on cigarettes, the cruise ship industry, hotel lodging, guided tours and pull-tab gambling.

But Murkowski and the Legislature must find long-term solutions to the state's fiscal gap by 2007, when the savings account is projected to run dry.

On Tuesday, Jan. 13, Murkowski will give his State of the State address to a joint session of the Legislature.

Murkowski said he will not propose a broad-based tax this session, but he promised a "significant proposal" on Tuesday.

"In all candor, I'm saving myself for the 13th," Murkowski said.

Q: What do you think your biggest accomplishments were last session?

A: I think getting a handle on reducing the rate of growth of government and the fact that we indicated we would not go into budget reserve more than $400 million, when in actuality we went in about $276 or $278 million. I think meeting our commitment to the voters that we would not propose a state income tax or a broad-based statewide sales tax, neither of which we supported. We had a seasonal sales tax, which wasn't supported. I think basically getting a hold of government, turning it around, expediting the permitting process, addressing accountability within the state agencies, reducing duplication, having positions that had been unfilled for some time eliminated.

Q: The state's Public Employees' Retirement System and Teachers' Retirement System are underfunded by about $4.2 billion right now. Much of the burden has been passed on to cities and school districts. What's your plan for resolving this situation?

A: Well, we've got a couple of recommendations. One of them, obviously, is to increase the employer contribution, but that's not going to be enough. We are going to have to reach out and address some other areas that will, I think, be negotiated with the various groups before we reach a final accord because, obviously, these are commitments that are made. And the fact that they are underfunded is associated with expanded benefits, increased costs and so forth. And the legitimate question is to what extent should the employee contribute as well. But clearly it is going to take more of a contribution from the state.

Q: Do you plan to fully honor past commitments on bond debt reimbursement for school construction?

A: Well, we will honor, obviously, the authority of the bonded indebtedness that we went to the market a year ago with significant issue for both new schools, maintenance and infrastructure. Not only in schools but in (the state Department of Transportation) as well. We will fund those commitments. In fact, we've accelerated that program. Beyond that I'd have to comment on an individual basis. ... We are committed, for example, to increasing the capacity at Mt. Edgecumbe by an aggressive utilization of some space that needs renovating, and I think we're talking about a combination for about another 60 students. We think that the waiting list is evidence of the level of support for that institution, and they do a good job providing alternative boarding facilities, particularly for rural kids.

Q: Do you support Juneau Mayor Bruce Botelho's plan to bond with the state to build a new Capitol in Juneau?

A: In general, yeah. Subject to, you know, the ability of the state to meet the lease obligations and the ability of the community to provide the facilities that are needed. I think we've waited far too long on that project. I intend to accelerate it.

Q: Some of your critics have said that the restructuring of some state departments has resulted in a 40 percent loss in staff that handled environmental monitoring. In light of these changes how can you assure that development will be done in a responsible way?

A: Well, I think we have a professional commitment in the type of leadership that Ernesta Ballard, our commissioner (of the Department of Environmental Conservation) has displayed - her knowledge and expertise and experience in the area of environmental conservation management. Just because you have X number of people doesn't necessarily mean you have a structure where you have accountability and you can necessarily make better judgments by just having more people. It's how those people are utilized, their capability, their training.

Q: A study by the University of Alaska's Institute of Social and Economic Research shows that more than 50 percent of the increase in the state's budget between 1990 and 2002 is due to new federal spending. You played a significant role in that during your time in the U.S. Senate. It's also largely due to Sen. Ted Stevens' position of seniority in the U.S. Senate. Do you anticipate that federal spending will rise, fall or remain steady and what is the backup plan if that money becomes no longer available?

A: Well, I think it's fair to say that we should plan for less federal spending. On the other hand, the reality with such things as the missile defense system, which was really a matter of strategic location at Delta, has resulted in a tremendous commitment of federal funds because they recognize that Alaska is a first line of defense. We will continue to maintain, in my opinion, a high level of capability for troop training in both Eielsen, and Wainwright, and Elmendorf and Fort Rich because the facilities are there and it's a good place to train as well. The fact that the Alaska National Guard will be manning, basically, the missile defense system is another significant contribution that will remain constant because that missile defense capability will be there for a long time. Then you recognize the fact that we have got a lot of catching up to do. We've only been a state since '59. The federal contribution is significant inasmuch as the federal government owns so much land here, so the presence of the Park Service and the Refuge System and the BOM and so forth will be very much a part of the economy. Those are sustaining. Sen. Stevens' ability to maintain his chairmanship (of the Senate Appropriations Committee) is, of course, limited by Senate Rules. That's a reality that suggests that, you know, there won't necessarily be the flexibility that a chairman has when that term ends. So that's why I'm so committed to expanding the private sector, based on resource development of fish, timber, oil, gas, minerals, tourism and so forth.

Q: Do you plan to run for reelection in 2006 and what do you hope to have achieved by then?

A: Well, first of all I haven't made any plans on reelection. It's becoming more and more apparent that it's going to take a little longer than 2006 to finish what I came for. On the other hand, what I intend to contribute to the state is my commitment to the belief that we can develop our resources responsibly, sustain a better level of job opportunities to retain our young people and maintain a reasonable tax environment and have one of the highest standards of living of any state in the union.



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