House OKs budget despite protests

Posted: Wednesday, March 14, 2001

The Republican-led Alaska House of Representatives approved a "status

quo" state budget today, amid protests from Democrats and some Republicans

that vital needs were going unmet and that the budgeting process itself was

flawed.

And legislators continued to joust about a long-range fiscal plan to

address ongoing budget deficits.

The Republican majority voted for a $34.1 million increase in

discretionary general fund spending, the first such increase in six years.

But with some defections, the majority on Tuesday rejected amendments

proposing $31 million more for programs affecting children, health care,

education, alcohol and public safety. Democrats had proposed to pay for them

mostly out of a prospective increase in alcohol taxes. Only one Democrat who

is not a member of the majority, Sharon Cissna of Anchorage, voted for the

budget on the final roll-call, which was 27-10.

But Finance Co-Chairman Eldon Mulder of Anchorage suggested that some of

those funding requests would get another look before the Legislature

adjourns on May 8, and he didn't rule out an increase in the alcohol tax, an

idea that seems to be gaining momentum in the Legislature.

"It's still the first quarter," Mulder told his colleagues Tuesday.

The Senate still must come up with its own version of a budget, and then

the two chambers will have to resolve their differences in a conference

committee, keeping in mind what Democratic Gov. Tony Knowles might veto.

"When I vote no today, I'm not saying no for the rest of the year,"

Mulder said.

Rep. Jim Whitaker, a Fairbanks Republican, urged caution when Democrats

tried a second time to further increase funding for the University of

Alaska.

"Were this the last vote on this issue, I would be the first to stand

with you," Whitaker said. "We are a House divided. ... We will lose the war

if we pass this amendment."

And against claims by Democrats that the House majority is short-changing

critical areas in which spending now would actually save money in the long

run, Mulder offered plenty of numbers in an attempt to demonstrate the

Republican commitment to programs also favored by the minority.

Mulder complimented Democrats on offering a few major amendments that

sparked "a healthy dialogue," instead of the long floor sessions of the past

that served only to wear everyone down, he said. But the proposed increase

in alcohol taxes, while politically clever, was not necessarily a good way

to fund their requests, he said. "You're talking about quadrupling the

alcohol tax."

Majority staff said that one effect of increasing state alcohol tax

revenue, now $12.8 million a year, by another $30 million would be to raise

the cost of a gallon of hard liquor by $14.

On the whole, though, both sides agreed that the debate was more civil,

less protracted and more substantive than in recent years.

Budget overview

The House has proposed a general fund of $2.24 billion for the fiscal

year that begins July 1. Republicans said that's $60.1 million less than

requested by Knowles. Excluding the Alaska Permanent Fund, Republicans say

their overall operating budget with federal funds would be $4.64 billion, or

$64.9 million less than Knowles proposes.

While the Republican majority implemented a $250 million cut in the

general fund during the five years ending in 2000, Tuesday's vote was for an

overall increase. Compared to the general fund adopted by the Legislature

last year, it's $72.6 million more, for an increase of 3.3 percent, said

staff. Factoring out higher debt payments and contractual salary increases

that have come due, the discretionary increase for 2002 would be $34.1

million.

A draw of $470 million from the $3 billion Constitutional Budget Reserve

will be needed to balance the general fund. That requires a three-fourths

vote of the House, or 30 votes, three more than the number of Republicans.

Rep. Richard Foster, a Nome Democrat, caucuses with the Republicans, but

so far there are not two more Democrats to tap the CBR, which gives the

minority some leverage when deals are cut at the end of the session. And

Rep. Con Bunde, an Anchorage Republican, cast an apparently symbolic vote

against the CBR draw, which fell short on a 25-12 vote. That doesn't stop

the bicameral process from going forward, however.

About a third of the general fund is for education and early development

programs, health and social services would get 22 percent of the money, and

the university is set to receive 9 percent.

This year, the plan is to have a budget "on par" with last year's, in

total amount and priorities, Mulder said.

Democrats characterized that approach as "standing still" budgeting.

"We can't say the status quo is good enough," said House Minority Leader

Ethan Berkowitz, an Anchorage Democrat. "When the time of reckoning comes,

I'm glad to be on the side that wants to move forward."

In contrast to years past, in which Democrats futilely pushed more than

100 line-item amendments in House floor sessions going past well into the

next day, they focused Tuesday on five critical areas:

Children's programs, including Head Start, child care and permanent

adoption placement. Price tag: $2.73 million.

Education, including a larger increase for the University of Alaska,

and full funding of a pupil transportation program that local school

districts have cannibalized to make up for insufficient operating funds for

the classroom. Price tag: $13.27 million.

Alcohol abuse, increasing treatment programs for both adults and

juveniles. Price tag: $6.07 million.

Public health, including preventative medicine to stamp out a

resurgence of tuberculosis in rural areas. Price tag: $3.1 million.

Public safety, particularly in the Bush, including nine more state

troopers, 20 more public safety officers and increased funding for community

jails. Price tag: $5.79 million.

Republican dissent

Democrats, anticipating Republican objections about drawing down the

budget reserve even faster, made their amendments contingent upon approval

of an increase in alcohol taxes that would provide enough revenue to cover

the programs.

Their plea for better investments in "core" areas, and perhaps the

funding source, attracted some stray Republican votes. Democrat-sponsored

amendments won up to 16 votes.

For example, freshman Lesil McGuire of Anchorage voted for the education

amendment; Juneau veteran Bill Hudson supported the alcohol initiatives; and

McGuire, Anchorage sophomore Andrew Halcro, Homer freshman Drew Scalzi and

Wrangell freshman Peggy Wilson supported a $1 million increase in state aid

for pupil transportation. Hudson, Whitaker and Soldotna freshman Ken

Lancaster voted against the last amendment, even though they initially

supported a similar measure in the House Finance Committee.

Halcro announced, in support of a proposed $7.4 million amendment to the

university budget, that he wasn't going to be misled by "trust me" rhetoric,

as he said he has been in the past. "This is my one opportunity to fund the

university the way I think it should be funded."

And Lisa Murkowski of Anchorage, while voting no on the amendment for the

university, said she expects Mulder to make good when he says there is hope

for additional funding for education later in the session. "I'm going to

hold my colleagues' feet to the fire. You'd better be there, because I'll be

there to remind you."

Finance Co-Chairman Bill Williams, a Saxman Republican, counseled

patience. He said that money for state employee salary increases, power

subsidies for rural villages and an increased university budget wasn't

approved until late in the 2000 session.

How much is enough?

Mulder consistently pointed out how much the state already is spending on

the critical areas cited by Democrats. Referring to the $61.8 million

already budgeted for the public safety programs under debate, he said: "I'd

say that's a significant investment. ... Crime in Alaska is not on this

rampant increase. Where's the crisis?"

Berkowitz said, though, that while national rates of homicides and rapes

have been dropping, Alaska is seeing a higher incidence. Mary Kapsner, a

Bethel Democrat, said in bad weather days can go by before state troopers

respond to a criminal incident in a remote location. And John Davies, a

Fairbanks Democrat, said that his caucus' failed alcohol initiatives would

have addressed the fact that addiction is a major contributing factor to

most crimes and incarcerations.

"We could use probably another $1 billion to satisfy all the requests,"

said John Harris, a Valdez Republican and finance subcommittee chairman.

Long-range plan?

On Wednesday, Halcro, an ostracized member within the majority, said he

had heard himself described as "lost" for taking a stand for more spending

on the university and for a long-range fiscal plan. "I'm not going to put my

vote in somebody else's hand. ... I'm lost? The process is lost."

While up to 10 members of the House are having informal conversations in

the evenings about a long-range plan, there is no official movement, he

said. "Does anybody really want to be in power when this state runs out of

money?"

"This ship is on a course for the rocks," said Hudson. While moving on

new taxes and the use of permanent funding earnings to fund state government

"will put us somewhat at risk" politically, Hudson declared: "I don't give a

damn."

Mulder said that $1.4 billion in spending cuts accumulated through last

fall are the biggest single reason why the CBR hasn't been depleted already.

As a result, there is time to work out a long-range plan, he said.

Complaints about closed doors

There also were lingering complaints about the closed-door process that

yielded spending targets for the budget and reversed the outcome of the vote

involving Hudson, Whitaker and Lancaster in the House Finance Committee

deliberations Sunday.

When Mulder talked vaguely of spending adjustments that could be made

later on, Berkowitz said: "Full, fair open government -- that's one of the

things I stand for. ... What don't we trust the people to know? Let's put it

out there. Are we worried about the Senate? Then let's say it."

Mulder told Berkowitz to calm down, that he was referring to the

reappropriation of some job training funds to boost the university's bottom

line.

In an interview Tuesday evening, Mulder said that he's trying to head off

as many conflicts as possible between the majority and minority. An

additional $880,000 was pumped into the ferry system in committee because

it's "a very high priority to a number of minority members," he said.

At the same time, he has to beware members of his own caucus who would

vote the whole budget down if spending goes up too much, Mulder said.

Democrats continued to question the process today, with Rep. Eric Croft

of Anchorage saying that in effect the entire House had delegated to Mulder

the authority to set spending caps. Once set, those caps often were enforced

in private conversations, preventing some members of the majority from

voting their conscience on Democrat-sponsored amendments, Croft said. "I

know there were people who voted against things that they were for."

No amendment in the House Finance Committee that was opposed by Mulder

passed, and none he supported was defeated, Croft said. "There are very

efficient dictatorships. There are very efficient monarchies. There are

clumsy aspects to democracy." But if efficiencies were realized, the result

is that the budget passed by the House "is not the collective will of this

body," he concluded.

"That's absolute trash," responded Anchorage Republican Joe Green. Rather

than dictating budget numbers, Mulder "made sure that the public was very

involved all the way along."



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