Murkowski: Let voters decide on fund issue

Posted: Thursday, April 15, 2004

As time begins to run out on the Alaska Legislature, Gov. Frank Murkowski called on lawmakers to let voters decide whether to use a portion of the Permanent Fund to balance the state budget.

The Republican governor also endorsed a House measure on Wednesday to divide earnings of the $28 billion fund 50-50 between state government and dividends to eligible Alaskans.

It is his strongest statement to date on a specific plan to close the state's chronic budget deficits. Murkowski had been silent on what portion of the fund earnings should be used and had left it to lawmakers to hash out.

But with the end of session less than a month away and lawmakers lacking support to muster a supermajority vote to put the issue to voters, Murkowski turned up the heat on Wednesday.

"Give the people the right to vote on the issue, that's what it's all about," Murkowski said. "Give the people the right to vote on these issues because it will have such an incredible impact on the level of public service that the public expects."

Earlier this year, Murkowski convened a panel of 55 Alaskans that recommended using a portion of the fund for state government. As the Conference of Alaskans convened in Fairbanks, Murkowski warned that "Draconian" cuts could be in the offing if the state doesn't resolve its budget woes this year.

The state has no statewide income or sales tax and relies on money from dwindling oil production for more than 80 percent of its revenues.

But lawmakers remain far apart on any agreement to finally dip into the permanent fund to fund future budgets. And the Murkowski administration is bracing for a spring revenue forecast that is expected to show record high oil prices that could dampen the cry for a fiscal fix.

Murkowski warned that even with high oil prices, the state faces two more years of deficits and without the permanent fund lawmakers would have to find more than $500 million in additional revenues from somewhere else.

He urged lawmakers to end "gridlock" over the issue before the Legislature adjourns May 11 and find a bipartisan solution.

"After all, we've been debating this issue for 14 years coming to grips with how we are going to solve our fiscal deficit," Murkowski said.

The House measure backed by Murkowski is also similar to legislation pushed by Senate President Gene Therriault, R-North Pole. It would limit permanent fund spending to 5 percent of its five-year average value - a so-called "percent of market value" plan - and divide the money equally between dividends and education.

The constitutional amendment would earmark the money for education despite a current prohibition against dedicated funds.

In addition, Murkowski would include the promise of dividends being paid to eligible Alaskans in the constitution along with a spending cap.

With a May 11 adjournment date looming, Murkowski said the pressure is on to resolve the state's fiscal woes this year before the state's budget reserve dips below $1 billion.

With the time remaining, Murkowski said he would lobby individual legislators to gain passage of the measures. But the package has plenty to further divide an already polarized Legislature. Budget-hawks within the Republican majority are demanding a spending cap, which was voted down in the Senate last week.

Democrats have been demanding that GOP lawmakers don't look to the permanent fund as the first solution to fixing the state's budget problems. They argue that low-income Alaskans rely on permanent fund dividends - which would eventually go down in value under the POMV proposal - more so than more wealthy residents.

Some Republicans see the permanent fund as a fair solution since it takes from Alaskans equally.

In previous years, Democrats and Republicans have been split over the debate for either an income or sales tax for the same reasons.

Even if Republicans backed some plan to change the state constitution, they lack the 41 votes needed to muster a two-thirds vote.

"We're not carrying the fiscal plan for Frank Murkowski," said Senate Minority Leader Johnny Ellis, D-Anchorage.

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