State's fiscal plan faltering

Leaders say plan isn't dead yet

Posted: Monday, April 22, 2002

House Republican leaders said today they haven't given up on a long-range fiscal plan but will move ahead on incremental revenue-raising measures, rather than a package.

Meanwhile, the bipartisan Fiscal Policy Caucus is reconvening, and Democratic Gov. Tony Knowles has started talking with both sides in the House to try to break the logjam.

The House majority caucus on Friday failed to reach agreement on a comprehensive package of taxes and permanent fund earnings to plug a $1 billion fiscal gap, according to Speaker Brian Porter and Finance Co-Chairmen Eldon Mulder and Bill Williams.

But there's enough support within the 28-member caucus 15 members to bring two relatively small bills to the floor, they said.

One is an increase in the alcohol excise tax that could raise from

$17 million to $34 million, and the other is a "municipal dividend" that would use about $59 million in permanent fund earnings to replace current programs for revenue sharing and municipal assistance.

"We think we need to go forward with this Plan B approach, just because the time's a-wasting," Porter said. "But we're not, and have not, and probably won't until the end of session give up on trying to do more."

There's support for floor action on a sales tax, also, but the Democratic minority won't commit to any additional votes toward a 21-vote House majority, Williams said.

Porter said "one more iteration of a plan" will be discussed within the House majority during the next couple of days. There's also discussion of expanding the Republican-Democratic negotiating team from three members each to six each, "and see if we can get some better ideas with 12 rather than six," he said.

House Democrats struck a gloomy note this morning.

"It's depressing the developments of the majority caucus," said Rep. Eric Croft of Anchorage. As for whether the alcohol tax or municipal dividend could win Democratic support on their own, he said, "I would have hoped both of them would have been part of a package."

Rep. John Davies, a Fairbanks Democrat who co-chairs the Fiscal Policy Caucus, said he already told constituents he won't support an alcohol tax on its own. Rep. Harry Crawford of Anchorage said he won't support the municipal dividend by itself, even though it's sponsored by Democratic Rep. Carl Moses of Unalaska.

House Minority Leader Ethan Berkowitz of Anchorage said he welcomed the intervention of Knowles, who proposed $400 million in new taxes during the State of the State speech in January and then largely stayed on the sidelines as the House debate unfolded.

"From my perspective, when you're stuck, it's good to get a tow truck in," said Berkowitz, who met with Knowles Sunday night.

Knowles and Porter spoke this morning, although Porter didn't mention it during his media availability.

But Porter said he was under the impression that Knowles would veto any bill that significantly taps permanent fund earnings. That's one reason, along with Senate resistance to raising major new revenue this year, that some House members have felt a sense of futility about a fiscal plan, Porter said.

Berkowitz said he has never heard Knowles say he would veto a long-range fiscal plan that taps permanent fund earnings, although the governor has said often that a public vote should precede any such move by the Legislature.

"He understands that it's the people's money," Berkowitz said. "He also understands the dimensions of the problem."

The threat of a veto is "a bogeyman dreamed up by some members of the majority," he said.

The governor's communications staff was unable immediately to clarify Knowles' position this morning.

Tuesday, the Fiscal Policy Caucus will look at a plan by Davies for an income tax that would base its rates and brackets on the amount of a 3 percent sales tax that Alaskans of various income levels would pay. That's an attempt to offset Republican complaints about "punishing success" and also the concern of municipalities with sales taxes that they would lose business to other cities and the Internet. Porter said it sounded too complicated to gain traction this late in the session.

Bill McAllister can be reached at

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