House GOP approves '04 budget, major cuts

Posted: Friday, April 11, 2003

House Republicans approved a $2.3 billion operating budget on Thursday over the objection of minority Democrats who say it shortchanges education and other essential programs.

The vote retained many of the deep cuts proposed by Gov. Frank Murkowski, although House Republicans restored $45 million in spending on the state's popular longevity bonus program for elderly residents and added back some money for education. It still cuts education spending for public schools and the University of Alaska, Democrats said.

"We're here at this crossroads, and at best this budget stands us still and in many important areas, it moves us backwards," said House Minority Leader Ethan Berkowitz.

During budget debate, Democrats proposed nearly 30 amendments to the plan. Amendments would have restored $10.3 million to the University of Alaska, increased the state's school funding formula and restored other education cuts.

But House Republicans held firm with the plan. The budget was passed 27-11 along party lines. Angoon Democrat Albert Kookesh and Saxman Republican Bill Williams were absent.

House Finance Co-chairman John Harris maintains the final budget does mitigate cuts proposed by the governor. With the GOP in control of both the Legislature and the governor's office, a constant theme in crafting a fiscal 2004 spending plan has been for the state to live within its means.

Alaska relies heavily on oil for its revenues and declining North Slope production has left the state with a chronic deficit. Over the last dozen years $6 billion has been taken from the budget reserve to balance state spending.

Now the Constitutional Budget Reserve is down to $1.9 billion and on pace to be empty within Murkowski's current term. The governor crafted a plan that he says would draw about $393 million from the reserve in the upcoming fiscal year.

To reach that figure, Murkowski is backing about $120 million in tax and fee increases along with the same amount in one-time revenues from various endowment funds.

But the state's revenue forecast now shows lower oil revenues, which could prompt deeper cuts in state spending along with increased taxes.

The House hasn't acted on any of Murkowski's proposed tax increases, which will be essential in limiting the draw on the reserve fund.

The budget now goes to the Senate, where leaders have indicated more may be cut from K-12 education.

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