U.S. Sen. Frank Murkowski, a Republican candidate for governor, today rejected major new taxes as a solution to the state's fiscal gap.
In his annual address to a joint session of the Legislature and in a news conference afterward, the state's junior senator said natural resource development is the key to long-term prosperity.
"Proposals are being made to pull money out of our economy through taxes rather than put money into the economy with jobs, growing our economy, development," he said.
He complained of "a decline mentality" that has accepted the drop in oil prices and production, as well as declining state revenues, and he also said the state should snap out of "a dangerous dependence on federal handouts."
"There's been a no-growth syndrome in this state for some time," he said. "We've got to turn that thing around."
Murkowski emphasized that he was not speaking to legislators as a gubernatorial candidate, and he told reporters it's too early in the campaign season to start laying out details of his platform or contrasting himself with the Knowles-Ulmer administration. Lt. Gov. Fran Ulmer is the likely Democratic nominee for governor.
But Murkowski threw some cold water on efforts by the bipartisan, bicameral Fiscal Policy Caucus of the Legislature to find new sources of state revenue although, when asked, he endorsed a dime-a-drink increase in the alcohol excise tax being sponsored by his daughter, Lisa, a Republican state representative from Anchorage who is co-chairwoman of the caucus.
The state budget faces a $1 billion-plus shortfall by the second half of 2004 at currently projected oil prices and spending levels.
Murkowski exuded confidence that oil will rebound. Pressed for other revenue options, he said a seasonal sales tax could be considered so that nonresidents contribute to the state, but he ruled out any "across-the-board" taxes to plug the gap.
"I do support a manner in which people who earn their living in Alaska and are not paying their way should have some kind of methodology so they, too, can pay a fair share to the state of Alaska for the services they're provided," he said. A refund through the permanent fund dividend program could keep the burden of the seasonal tax entirely on nonresidents, he said.
Murkowski didn't clarify how he thinks that Alaska residents the only Americans who pay no state income or sales taxes are shouldering a fair share of the cost of their government.
Rep. John Davies, a Fairbanks Democrat who is co-chairman of the Fiscal Policy Caucus, described Murkowski's approach as "tax somebody else to solve our problem."
"I don't think he's changed anything," Davies said. "He's just articulating one view that's out there."
While it's "easy to talk about diversifying the economy," the state can't benefit from economic development unless there's a tax structure in place first, he said. Otherwise, the so-called "Alaska disconnect" means that more jobs and new residents actually make the fiscal gap worse, not better, he noted.
Ulmer says she supports the plan of Gov. Tony Knowles for $400 million in new taxes this year, although she has hinted that she will have a somewhat different proposal if the Legislature doesn't act this session.
Murkowski said that budget reductions must be considered to help close the fiscal gap, but he cautioned against balancing the budget "on the backs of state employees."
"What you do is, you bring the state employees into it; you have them join the team," he said. "I don't have to be in Juneau half a day and I've got a lot of suggestions from people on the ferry system, or the manner in which permits are granted, or any number of things. ...
"You've got an extraordinary flip-flop in this state. You've got a situation where more often than not the Legislature has been reducing the governor's budget. Usually, in most states, the governor's vetoing the Legislature's budget."
Murkowski said that Alaskans must not look to the congressional delegation to prop up a weak economy or faltering state budget.
"It seems lately we ask less about what we can do for ourselves, and more about what we can get the federal government to do for us," he said. "If the federal presence in Alaska evaporated tomorrow, I'm told the state's economy would contract by one-third."
One way to help keep Alaska on a resources-based footing would be through oil exploration on the arctic coastal plain, Murkowski said. With that issue pending in the Senate, he thanked the Legislature for appropriating another $1 million to the lobbying group Arctic Power. "Your dollars are well spent."
There are about 55 votes in the U.S. Senate for opening up the coastal plain of the Arctic National Wildlife Refuge, and Senate Majority Leader Tom Daschle, a South Dakota Democrat, has threatened to pull the energy bill if ANWR supporters reach the 60 votes necessary to shut off a filibuster, Murkowski said. "That's hardball politics. That's presidential politics. But I think it's the wrong thing to do for America."
Murkowski also is a champion of a natural gas pipeline from the North Slope along the Alaska Highway through Canada.
"Once and for all, we've got to put this issue to bed and mandate a southern, Alaska Highway route for the gas," he said. "This route will guarantee more jobs for Alaskans and give us the chance to develop our own petrochemical industry right here in the state. We simply can't afford not to do it."
Murkowski said he thinks the Senate will preserve the House-passed provision in the pending energy bill that would outlaw the so-called "over the top" route from Prudhoe Bay to the Mackenzie Valley in the Northwest Territories, where there are additional natural gas reserves.
Also in the energy bill, Murkowski is fighting for a tax credit for development of heavy oil in an Alaska field, research and development funds for energy technologies, and subsidization of rural electric bills.
On timber, Murkowski urged legislators to stand up to "extreme environmentalists."
"During this past cutting season, the industry harvested the smallest volume of timber in Southeast Alaska since the Second World War," he said.
And he has asked Secretary of State Colin Powell to seek negotiations with the Canadian government on an addition to the Pacific Salmon Treaty aimed at controlling migration of farmed salmon from British Columbia.
"It could be an environmental disaster of some magnitude" if farmed salmon establish breeding populations in Alaska waters, he said.
Murkowski also touted proposals for new transportation corridors, including an extension of the Alaska Railroad into Canada a project that could be associated with missile defense in Alaska and new roads tying Juneau and Wrangell to the North American highway system.
Referring to Juneau's status as the only landlocked state capital, Murkowski said: "I don't know how unique you want to be."
He concluded: "With the right federal incentives that untie our hands and reward our contributions to national energy security, we can apply technology, develop markets, build infrastructure and ensure access to get the most out of our vast resource wealth. But first, we've got to have a positive attitude and federal and state governments that are efficient and work with industry to responsibly achieve our goals together. I know that we have a president and an administration that are ready to work with us to achieve our objectives. ....
"I don't think there's any question we're up to the challenge, so let's roll."
Bill McAllister can be reached at email@example.com.
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