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KENAI - Alaska's fiscal crisis has been exacerbated by the lack of dialogue between the Legislature and governor something he can fix if elected governor, U.S. Sen. Frank Murkowski said.
"We can't have a standoff," the Fairbanks Republican told the Soldotna Rotary on Thursday. "What drove the decision (to run now) is that we have to turn around the direction of Alaska."
Murkowski is considered the front-runner for the Republican nomination. His counterpart on the Democratic side, Lt. Gov. Fran Ulmer, said Friday that there has been plenty of discussion about the fiscal gap among Republicans and Democrats in the Legislature and administration respectively.
"I think the reason we haven't solved the fiscal gap is that it's hard to do it," Ulmer said. "Most of the solutions are painful. Elected officials don't like pain."
Ulmer said what would be most helpful from Murkowski would be proposals for closing the gap between spending and earnings.
Democrat Gov. Tony Knowles has proposed raising $400 million in new taxes next fiscal year. He wants a $350 million income tax, a cruise ship passenger tax and a dime-a-drink hike in the alcohol tax.
Ulmer has not endorsed the package, but praised Knowles for offering to phase in $1.2 billion in taxes and added revenue measures over three years.
If legislators choose a different combination of action, that's OK too, Ulmer said. Failing to take action to close the budget gap puts Alaska's economy, communities and permanent fund at a tremendous risk, she said.
Murkowski said a number of areas could be considered.
"It's been suggested that there be a freeze on hiring," he said. "The merits of that depend on whether you can reduce personnel by identifying duplication in government and so forth. I'm not suggesting that it's a cure-all, but it is reasonable to begin to pursue and question."
Other savings might be found in the permitting processes by which Alaska leases and sells its natural resources, he said.
Preventing growth in government could be impossible, Murkowski said, but there may be discipline enough to cap growth at 3 percent or 4 percent. If Alaskans are to be asked to make a sacrifice, they should be sure their government is as efficient as it can be, he added.
Would he consider a cap on the size of the Alaska Permanent Fund dividend?
"I'd prefer to expand revenues so the permanent fund would continue to grow," he said. But he noted that future dividends are likely to be smaller because of the current decline in the stock market.
The looming budget gap notwithstanding, there has never been a better time to make a run for the Alaska governor's mansion, he said. There's a Republican in the White House, two experienced Republican colleagues in the congressional delegation, a Republican majority in Juneau and a lame-duck governor who cannot run again, he said.
He also said Republicans lost control of the U.S. Senate to Democrats last year and with it the real seats of power, the committee chairmanships.
Murkowski said he thinks he can now do more in Juneau than he can in Washington.
Ulmer took issue with that premise. Sen. Ted Stevens, an Alaska Republican, is also in the minority. "That has not made him any less effective or less capable," Ulmer said.