Republicans: Budget plans too expensive

House leaders warn governor's agenda will bring fiscal problems

Posted: Tuesday, February 01, 2005

House majority leaders took some of the air out of the governor's proposed budget Monday, saying the spending increases outlined there may be hard to meet once the state burns through its oil revenue windfall.

Gov. Frank Murkowski's proposal includes spending and job increases that would bulk up the budget base and could mean trouble in three years, once the surplus is spent, said Anchorage Republican Reps. Norman Rokeberg, Mike Hawker and Kevin Meyer.

The Republicans said the need for fiscal discipline remains and additional revenue sources will be needed down the line.

Hawker, a member of the House Finance Committee, mentioned specifically a proposed $90 million increase to the Department of Health and Social Services, saying the department has improved services the past two years while keeping spending flat.

Meyer, the finance committee's co-chairman, said he is concerned with the proposed addition of 254 state jobs when the state is already facing shortages to its retirement systems.

Rokeberg, the House Rules Committee chairman, said if the governor's budget is adopted, the state could be see budget deficits again by fiscal year 2008.

"This can be extremely dangerous," Rokeberg said.

Some of the money Murkowski wants to use two years from now, particularly in education, may have to be included in next year's budget because of the shrinking windfall, Meyer said.

The Department of Revenue now estimates the surplus will be $187 million less than it forecast last October, or about $466 million, down from $653 million. That number is likely to change before the end of the fiscal year, June 30, because of the volatility of oil prices.

The governor's budget spreads windfall spending across this fiscal year and next, and it saves a portion of the surplus for later. The changes mean nearly $2.7 billion in total general fund spending for this fiscal year and $2.6 billion next year, under Murkowski's proposal.

The governor proposes spending $250 million more in general funds in the next fiscal year than lawmakers approved for this year.

Hawker said the Legislature should define the state's long-term prospects and come up with a fiscal plan.

Senate Finance Chairman Gary Wilken of Fairbanks said there are some concerns with Murkowski's budget, and said his committee will be looking at each agency to see where the increases would come.

The 254 proposed jobs raise a red flag, Wilken said, and part of the information gathering will include head counts to see where those new workers would go.

Office of Management and Budget Director Cheryl Frasca said of the new positions, 37 would be federally funded, 18 would be self-supporting and 18 others would be tied to new facilities already approved by the Legislature.

She said the Legislature's examination of the governor's proposal is part of the process.

"We submitted what we believe to be a prudent budget," Frasca said. "We welcome that discussion and look forward to seeing how they view the world."

Senate Finance Committee member Donald Olson, D-Nome, said the governor's budget is a good political move, keeping the state in the black for the next two years, but will present problems for the next administration.

"Everything looks good until that point, but when you look at fiscal year '08, it looks like we're going to go over a cliff," Olson said.

Senate President Ben Stevens of Anchorage said the state is fiscally prepared for the next year, and possibly two, and there aren't many state governments that can say that.

"The reality is, the state of Alaska is in pretty good shape," he said.

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