Group forms to fight fiscal gap

New alliance of frustrated lawmakers crosses party lines

Posted: Wednesday, March 28, 2001

Frustrated by inaction on a long-range fiscal plan for the state, moderate Republicans and Democrats formed a new group Tuesday to research and promote potential revenue sources and cost savings for the state.

But while the Fiscal Policy Caucus is strongly bipartisan, with 13 Republicans and eight Democrats, it is barely bicameral.

Twenty of 21 founding members are representatives - half of the House. The only senator who showed up in response to an open invitation, Republican Alan Austerman of Kodiak, is a freshman and was a member of the House last year.

Membership could expand, however, according to Rep. Bill Hudson, a Juneau Republican who was elected chairman. Hudson said House leaders, including Speaker Brian Porter of Anchorage and Jeannette James of North Pole, support the effort to establish a new process for looking at a long-range plan.

"The Senate is a body that's outside of our control and hasn't stepped forward at this time," Hudson said.

Members of the Senate leadership did not respond to requests for comment.

Hudson, who has pushed for using some earnings of the Alaska Permanent Fund to help balance the budget, started to rekindle discussion of a long-range plan with the recent introduction of a bill for an income tax.

While he said he doesn't expect it to pass this year, he sees better prospects for a few other revenue-raising measures - such as diverting an additional $40 million in annual oil revenue to the general fund instead of the permanent fund.

Hudson said that the Fiscal Policy Caucus will hold open meetings and will welcome ideas from all quarters about what revenues can be raised and what expenditures can be cut. After the session adjourns, caucus members will take the ideas to the public, he said.

The problem is an on-going gap between state revenues and expenditures. In the next fiscal year, an estimated $470 million from the Constitutional Budget Reserve will be needed to close that gap. At that rate, the $3 billion reserve, consisting of money won through lawsuit settlements with the oil industry, would be depleted in another five years.

"I think it's extremely irresponsible to be doing that," said Rep. John Davies, a Fairbanks Democrat who was elected co-chairman of the caucus. The reserve was intended to be "a shock absorber" or "rainy day fund" during times of unforeseen fiscal problems, not a regular means of propping up the general fund, he said.

Rep. Andrew Halcro, an Anchorage Republican, said some legislators have deferred discussion of a long-range fiscal plan because they say the public isn't ready to consider one.

"They're never going to be ready until we start talking to them," Halcro said. He pledged to "turn on all the lights, look under every stone, listen to all Alaskans."

"This state can't continue to sit on its hands for fear of political reprisals," Hudson said. "I don't sense that the people are fully aware of all of the different program funding needs and the impact on their everyday lives."

The Fiscal Policy Caucus meets again at noon Friday.

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