Capitol Notebook: Back to the future on fiscal gap

Posted: Sunday, May 05, 2002

Bill McAllister can be reached at billm@juneauempire.com.

Dec. 15, 2006 - Gov. Lisa Murkowski today released a proposed state budget and tax package that carry through on her campaign pledge to increase state revenues and expenditures by $2.5 billion.

Murkowski, who unseated her father, Frank, in the Republican primary, said her budget represents a complete philosophical reversal from the previous Murkowski administration.

"Fortunately, in our family, differences of opinion are respected," Murkowski told reporters at the Capitol. "But it's time to make necessary commitments to education, public safety and infrastructure. That is, to having them at all."

The governor's proposed general fund of $2.5 billion would be a nearly 2.5 billion percent increase from the 2006 fiscal year figure of $1.08.

Her revenue package is nearly three times the amount passed by the House on May 2, 2002, which subsequently failed in the Senate at the conclusion of a 40-day special session that included a fist-fight between a legislator and a reporter, as well as the notorious "Hot Tub Caucus" videotape that aired on the Fox network program "Maximum Exposure," ending several careers.

Murkowski's legislation is aimed at reversing the effects of the 2005 session, in which the infamous "Kohring Plan" was enacted.

That plan, named for then-House Finance Chairman Vic Kohring of Wasilla, responded to the depletion of budget reserves by reducing the general fund from $2.5 billion to the current level of a buck and change.

"Cut, cut, cut, cut, cut, cut, cut, cut, cut, cut, cut," Kohring giddily declared after wielding the gavel for the first time last year, quoting the now-legendary constituent e-mail message to former Rep. Andrew Halcro on 5/2/02.

Along with relocating state government to an Anchorage strip mall "Legislators at the retail level," says the sign on the new Capitol the Kohring plan started out the first day with the elimination of K-12 and university education, most welfare payments and subsidies for day care and rural power, within a month forcing the emigration of about half of the state's population to Portland, Ore.

The Stalinist Parasites Action Committee filed suit, but the Alaska Supreme Court rejected the group's appeal, based on a "friend of the court" brief by public interest litigant Dave Donley, now mayor of the North Slope Borough.

Led by Kohring, the Legislature continued to cut through the 2005 session, diverting all oil income to the permanent fund and forcing layoffs in 1,000-employee increments.

The increasingly sharp drop in residents boosted permanent fund dividend checks to this year's record level of $13,228, making the oil-wealth savings account a big target for those who say that spending reductions have gone too far.

Murkowski proposes to use $1.5 billion in permanent fund earnings for government.

"It was supposed to be a rainy day fund," she noted. "Ironically, it's only when we've left Juneau that we're going to use it that way."

But Senate Minority Leader Rick Halford remains opposed to any use of the earnings. "The governor proposes to steal from our great-great-grandchildren," he said.

Halford said that there's no proof that oil prices won't exceed $100 a barrel in the next fiscal year, in which case enough money could be siphoned off to support a general fund of at least $20 or $30.

The governor's revenue package includes a $100 per word "talking head tax" aimed at political rhetoric. Sen. Robin Taylor blamed the tax proposal on the Knowles administration.

Murkowski also is seeking to build on the alcohol excise tax increase she managed to squeak through the Legislature in 2002, when she was a member of the House. The so-called "Alaska Pretty Good Tax" would be regressive, in that the rates would be far higher on Boone's Farm wine than on Glenmorangie single-malt Scotch.

Bill McAllister, who really doesn't pretend to have a crystal ball, can be reached at billm@juneauempire.com.



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