GOP seeks smaller budget

Republicans look at spending freeze, but no new taxes

Posted: Wednesday, January 22, 2003

House majority Republicans said Tuesday they anticipate a flat budget and a spending freeze, and will consider nontax revenue measures this session such as implementing a lottery or selling state land.

Similarly the Senate majority caucus said it doesn't anticipate increases in the budget and instead hopes to see reductions.

House and Senate Republicans were optimistic that reductions can be achieved through departmental reorganization by the Murkowski administration. They blamed former Democratic Gov. Tony Knowles for preventing them from finding departmental cuts in past sessions.

"We, from my perspective, lacked somebody (in the governor's office) that really wanted to work with the Legislature to try and control and manage the cost of state government," said Senate President Gene Therriault, a North Pole Republican.

Senate Minority Leader Johnny Ellis in a press conference Tuesday afternoon fired back at Republicans.

"It's an old, tired excuse to blame everything - the inability over the last eight years to achieve their goals on the budget - to blame that on the past governor," Ellis said. "He's gone and they are still blaming it on him."

Rep. Eric Croft, an Anchorage Democrat, said the Legislature has implemented budget cuts for several sessions and now it's time for new revenues.

"I've heard the last hurrah of budget cuts for four or five years now. It got to the point where (House Finance) co-chair (Eldon) Mulder said they had done enough, they were starting to hurt Alaskans with their budget cuts," Croft said.

Croft said he hopes lawmakers are not doomed to repeat the process of trying to cut government with so many inexperienced lawmakers entering the Legislature this session.

"I hope we are not on a sort of endless cycle of forgetting our history," Croft said.

The administration of Gov. Frank Murkowski has signed administrative orders calling for reorganization of the Department of Transportation and Public Facilities and the Department of Military and Veterans Affairs. The Office of Management and Budget is working to find additional departmental cuts.

Murkowski ran on a platform of raising revenue through resource development, but House Speaker Pete Kott said the Legislature must continue to consider new revenue measures, including taxes.

Kott acknowledged that while the administration is focusing on attracting private investment through resource development, fiscal uncertainty in the state could dissuade future investment.

"As a consequence of not having that fiscal certainty we are finding that the decision-makers at the top are deciding to spend less and less in the state in exploration dollars," said Kott, an Eagle River Republican.

Rep. John Harris, a Valdez Republican and co-chairman of the Finance Committee, said that although Alaskans are not going to ask to be taxed, it is prudent for lawmakers to continue reviewing taxes.

Projections from the Department of Revenue released in November estimate that the Constitutional Budget Reserve - an auxiliary savings account used to balance the state budget - will run out of money by about 2005 if the price of North Slope crude maintains a long-term average of $22 a barrel.

The price of North Slope crude today is at $33.61 a barrel, but Kott said that number could decrease rapidly if the standoff between Iraq and the United States is resolved.

"If the crisis in Iraq comes to conclusion, I've heard from several sources that Alaskan oil is going to sell at between $10 and $12 a barrel," Kott said.

He said the House is working on forming a Ways and Means Committee to explore new revenue measures but was not sure whether such a committee has support in the House.

Kott added that leaders in the Senate indicated to him they are not interested in participating in the committee.

Democrats said they will work with the administration to promote entrepreneurial investment in the state, particularly in small oil field exploration and mining.

But House Minority Leader Ethan Berkowitz, an Anchorage Democrat, said Murkowski is responsible for filling the gap by developing resources.

Ellis said Democrats would use the theme of "putting Alaskans first" as a test by which to judge all proposals.

"We will give more detail about our goals and objectives further on down the road as we work with the Murkowski administration and the legislative leaders," Ellis said.

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