Ulmer chides opponent's math

Gubernatorial candidates differ on how to close state fiscal gap

Posted: Wednesday, February 20, 2002

When it comes to a long-range fiscal plan, Fran Ulmer suggests that Frank Murkowski needs remedial math.

Ulmer, the Democratic lieutenant governor and a gubernatorial candidate, took exception to a no-major-taxes stance Tuesday by Murkowski, the state's junior U.S. senator and likely Republican nominee for governor.

In his annual speech to the Legislature and in a news conference afterward, Murkowski said accelerated development of Alaska's natural resources can balance the state budget, without the imposition of major new taxes.

"It's fuzzy math," Ulmer told reporters later, echoing the famous phrase from George Bush's presidential candidacy. "Show me the money. Tell me how the math works on that."

Murkowski had rejected what he called "across-the-board" taxes, apparently meaning an income tax or year-round sales tax. Instead, he said the solution to the pending $1 billion-plus gap is tighter state budgets and a new regulatory climate that encourages the further development of timber, mining, fishing, oil and gas.

The senator said Alaska is suffering from a "decline mentality" in which people resign themselves to lower oil prices and production on the North Slope, as well as to flat state revenue.

"If you want the status quo, you can have that opportunity," he said, in an apparent allusion to the upcoming campaign.

But Ulmer took exception to any hint that the administration of Gov. Tony Knowles hasn't fought for more resource development.

"I would question his assumption that we've acquiesced to a decline mentality," she said. "There's a long record of pretty vigorous efforts on the part of this administration."

Ulmer mentioned extensive lobbying on opening the arctic coastal plain for oil drilling, development of the National Petroleum Reserve-Alaska, the push for a natural gas pipeline and the governor's sharp differences with former President Clinton's policies restricting logging in the Tongass National Forest.

On timber, "We've held up our part," Ulmer said. "Others at the federal level - you know, they weren't very successful, I guess."

And Ulmer said that while she also wants to stimulate natural resource production, it won't close the fiscal gap.

"Just do the math," she said. "How much more would you have to have of mining, oil and gas, fishing, tourism? ... You can't get there from here."

Aside from oil and gas, all businesses in Alaska generate slightly less than $100 million in state revenue, not including what they pay in user's fees such as the fuel tax, said Larry Persily, deputy revenue commissioner. Even doubling that would narrow the ultimate budget gap by only about 8 percent.

Knowles has called for an income tax at 20 percent of federal tax liability, a $30 head tax on cruise ship passengers and a dime-a-drink alcohol excise tax. The alcohol bill is sponsored by Murkowski's daughter, Lisa, a state representative from Anchorage.

The Knowles package would raise about $400 million annually as part of the governor's proposal for a three-year phase-in of $1.2 billion in new revenues. Ulmer said she's lieutenant governor first and a candidate second, so she won't propose a different response to the fiscal gap while the Legislature is in session.

But Ulmer said the main point is that doing nothing this year ultimately will deplete a key savings account and then threaten the earnings reserve of the Alaska Permanent Fund, with the potential loss of dividends and even inflation-proofing for the fund principal.

And delay also maintains an environment in which new business investment is discouraged, she said. "Putting this off hurts the economy."

Murkowski said he might be open to seasonal sales taxes as a way of getting the "fair share" from nonresidents, although he talked of refunding taxes paid by residents through the permanent fund dividend program. Although Alaskans are the only Americans who pay neither state sales nor income taxes, they do contribute to state government, argued Steve Frank, the senator's campaign treasurer.

"Most state spending is supported by our common resources - oil," Frank said. "To that extent, the people are paying."

But Republican state Rep. Bill Hudson of Juneau said he was disappointed in Murkowski for "taking the easy way out."

"I believe he's a little too far away to understand how deep and steep the fiscal gap is," Hudson said.

Bill McAllister can be reached at billm@juneauempire.com.

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