Lawmakers eye 10% cuts in agencies

Governor: Reductions needed because he won't let more than $400 million be drawn from reserve

Posted: Friday, February 20, 2004

State agencies may be subject to significant cuts in the next fiscal year as the Legislature tries to trim $80 million to $100 million from Gov. Frank Murkowski's budget proposal.

Rep. John Harris, R-Valdez and co-chairman of the House Finance Committee, said the committee leadership instructed its subcommittees to look at cutting 10 percent out of each agency's budget.

"The budget proposed by the governor has $80 million to $90 million in new revenue included in the total amount of money to be spent. We don't have an agreement in the Legislature at this point to raise the $80 million," Harris said Thursday.

The governor proposed a motor fuel tax, a pull-tab tax and a wildlife viewing pass last session to raise more revenue, but the bills are still languishing in the Legislature. Harris said those proposals as well as some new ones have not received enough support, and that he won't count on them for revenue.

The state has had to tighten its belt since Murkowski told the Legislature he would not approve a draw of more than $400 million from the Constitutional Budget Reserve - the state's savings account.

Murkowski budget director Cheryl Frasca said the governor's budget includes that $400 million draw. The administration laid out $200 million in revenue-raising proposals with the idea that legislators could pick and choose which they wanted.

"We laid out some proposals that we talked about in December about how we could fill that gap - increasing the tobacco tax, the transient accommodation tax," Frasca said.

The 5-percent transient accommodation tax would raise $49 million by taxing cruise ships, shore-side lodging and tourist activities. The tobacco tax increase proposal would raise $36 million. The governor also proposed a head tax for workers with the proceeds designated for education. Harris said those taxes simply haven't had enough support.

"My job is not to criticize or support one tax or another. My job is to say, 'What can I depend upon for revenue?' " he said.

Keeping in mind the directive to look at 10 percent cuts for each agency, the various House Finance subcommittees did just that for many departments.

The House Finance Resources Subcommittee proposed cutting 8.1 percent of the Department of Natural Resources' state funding. The proposed DNR cuts include $650,000 from the commissioner's office, leaving about $89,000 in general funds.

"The commissioner has the ability to move the money around in his department and so that would be his choice to move other funds around in his department to keep some of the people who might be affected by the cuts," said Rep. Mike Chenault, R-Kenai, subcommittee chairman.

DNR Commissioner Tom Irwin said it's too early to tell what the impacts of the cuts, including half a million dollars from the agency's oil and gas development program, would be.

"We were told in the committee, 'If you need to reapportion it, look at your priorities. We're not taking any of this personally," Irwin said.

But Democrats argued the cuts were arbitrary.

Rep. Beth Kerttula, D-Juneau and a member of the Resources Subcommittee, called the cuts "unthinking."

"We can't pretend that we're operating in a vacuum in the Legislature," she said. "This is sheer craziness, and so far no one is saying why they're taking these cuts or what the strategy is."

Finance Committee member Rep. Eric Croft, D-Anchorage, said the cuts to the oil and gas development program are particularly worrisome.

"They cut people for the Stranded Gas Act negotiations. We're just about to go into (the natural gas pipeline). If you're for resource development, that's the most significant resource development for 50 years," Croft said. "Some of the stuff that they've cut they can't mean."

Harris said the subcommittees left the governor's budget intact for several departments, including the University of Alaska, the Department of Military and Veteran's Affairs and the Department of Public Safety. Legislators proposed $8 million more than the governor proposed for the Department of Education.

Harris said the proposed cuts likely will fluctuate as the lawmakers move through the budget process.

"In some years the subcommittee levels were more or less what the finance committee did. This year it's liable to be much different simply because of the unknown amount of revenue we have to spend," Harris said.



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