Murkowski's fund rhetoric haunts him

During his campaign, candidate Murkowski downplayed state's woes

Posted: Sunday, February 22, 2004

Ed Martin Sr. voted Republican in 2002, thinking the Alaska Permanent Fund that he's fought to defend was in safe hands with Gov. Frank Murkowski.

A prolific advocate for the fund in letters to the editor, Martin encouraged everyone he knew to do the same. Two years later, he'd like to take a mulligan.

"He led us to believe he wasn't going to touch that permanent fund at all," Martin said. "I think he went back on his word and broke that trust."

In 1999, Martin was part of a grass-roots drive to defeat a ballot initiative to use a portion of the fund to close Alaska's yawning budget deficit.

Now, he supports a recall effort launched by a small group of Murkowski opponents angry about several controversial decisions the governor has made since taking office. For Martin, the recall starts and ends with the permanent fund.

"What I expect out of politicians, any politician whether he's Republican or Democrat, is to honestly present himself," Martin said. "He really sold me."

Campaign rhetoric continues to haunt the governor as he struggles with the seemingly intractable problem of closing Alaska's budget gap.

As his Democratic opponent called for using a portion of the $28 billion permanent fund along with an income tax to close the state's budget gap, Murkowski said no.

Murkowski campaigned on an anti-tax pledge and a general theme to spur natural-resource development. He downplayed the state's fiscal woes just as Democratic candidate Fran Ulmer emphasized how serious they were.

Now, faced with a deficit of more than $500 million and no clear indication of when added oil revenues will fill the hole, Murkowski wants voters to consider the permanent fund.

Murkowski asked lawmakers to set aside March 15 to begin debating whether to put such a constitutional amendment on the November 2004 ballot.

But winning the two-thirds vote from Republicans who control the Legislature and minority Democrats is a daunting task.

Republicans say they don't have enough support for such an amendment. Neither do Democrats, who want to write a constitutional guarantee that dividends will continue.

Even if it passes, Murkowski would have to muster support among Alaskans who are equally split on how to solve the state's revenue problems.

Andrew Halcro, a former GOP lawmaker active in the now defunct Fiscal Policy Caucus that proposed taxes and the permanent fund to close the state's budget gap, said Murkowski's campaign rhetoric makes the job even more difficult.

"It's unfortunate," said Halcro, who hosts a radio talk show on Alaska politics. "Now we are in a position that the public really needs a credible voice to advocate for some of these issues and Frank doesn't have the credibility."

Murkowski promised during the campaign not to use the permanent fund earnings to solve the state's fiscal woes without a vote of the people. But on several occasions - and as the election day drew closer - Murkowski completely ruled out using the permanent fund.

Deborah Bonito, former Ulmer campaign manager, remembers the yard signs that sprouted up supporting Murkowski and Lt. Gov. Loren Leman.

Among some Democrats, "Vote Murkowski-Leman, Protect Your Dividend" posters have become keepsakes.

"It was a brilliant strategy on his part by pretending we could solve our problems by more resource development," Bonito said.

Even before the Conference of Alaskans met in Fairbanks earlier this month to recommend using the permanent fund, Murkowski refused to endorse the idea.

Murkowski created the conference of 55 Alaskans to advise him in part on whether to use some of the earnings of the fund for state government.

"I've always felt that there was justification for using a portion of the permanent fund for government," Murkowski told reporters last week after the group had finished its work.

Ray Metcalfe, chairman of the Republican Moderate Party and a recall proponent, said the governor's permanent-fund stance has fueled the group's efforts.

"If he was always in favor of it, that's certainly not what he said on the campaign trail," Metcalfe said.

The administration endorsed a proposal by the Alaska Permanent Fund board of trustees to place a spending cap on the fund.

The so-called "percent of market value" change would limit the withdrawal from the fund to 5 percent of its value over a five-year average.

This proposal would make about $1.3 billion available for the Legislature to spend on dividends. Last year, $663.2 million was distributed among 589,300 Alaskans from the fund.

One proposal in the Legislature would divide the available money between state government and the cost of annual dividends.

State Attorney General Gregg Renkes, Murkowski's campaign manager, said the percent-of-market-value proposal would generate enough revenue to fully fund dividends and create revenues for state government.

"What the governor has proposed now is to work with the Legislature to put something before the people," Renkes said. "It seems to me that was the core of his commitment during the campaign."

Murkowski has been silent on whether it should be 50-50, or some other split, instead leaving it up to the Legislature to decide.

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