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Chances for a fiscal plan appear to be slim

Democratic leaders concede Senate won't act

Posted: Friday, May 10, 2002

Democratic leaders in the Legislature all but gave up on a long-range fiscal plan this morning.

At a news conference on the minority's priorities in closing out the regular session, key Democrats said they have concluded Senate Republicans won't budge on their opposition to an income tax or use of permanent fund earnings for government.

Meanwhile, Senate President Rick Halford said he hopes by Tuesday's adjournment to have floor votes on all of the legislation passed by the House on May 2.

"I think there's no intention not to, and I personally think it's a good idea to bring them to the floor," he said. "I think it's better to do them all together."

But except for an increase in the alcohol excise tax, which he supports, Halford said he couldn't imagine any amendments to the revenue bills that could attract the necessary 11 votes in the Senate.

Thursday, Democratic Gov. Tony Knowles attempted to step up pressure on the Senate by having prominent leaders in the statewide business community speak in favor of action on new revenue this session.

"No one expects it to be a rubber stamp of the House bills," Knowles said. "But now is the time to stop the slogans and begin the work."

This morning, the governor's press secretary wasn't conceding defeat.

"I don't think we're ready to pronounce hopes for a fiscal plan over at this point," said Bob King.

King said a special session addressing revenue measures is "an option." The governor already has threatened a special session if legislation extending the Regulatory Commission of Alaska isn't approved, and it would be possible to add the fiscal plan to the proclamation calling legislators back, King acknowledged.

But while arguing for increased spending for education and school construction, veterans' initiatives and power cost equalization, Democratic leaders expressed little optimism for new revenue in the Senate.

"We think that the Republicans are serious when they say the House plan is dead on arrival in the Senate," said Senate Minority Leader Johnny Ellis of Anchorage during a news conference called by Democrats. "We don't believe we have the power to force the Senate Republicans to do the responsible thing this year. ... They say 'no, no, no, no.' "

As for a special session, "If their attitude continues to be the same, I don't think there's much point," said Rep. John Davies of Fairbanks.

But the Democrats aren't unanimous in their outlook. In an interview, Rep. Harry Crawford of Anchorage said he was angry about the capitulation on the issue and said he would argue within his caucus for making the fiscal gap No. 1. The other priority issues, although important, are "subordinate," Crawford said.

Halford said he doesn't foresee how the income tax or the permanent fund legislation could pass, regardless of how they might be amended. The so-called "Alaska Fair Tax," with the burden placed most heavily on the middle class, doesn't make sense, and yet a progressive income tax wouldn't have the votes, he said.

As for permanent fund earnings, Halford speaks passionately about preserving the remaining 25 percent of the wealth of Prudhoe Bay for the next generation.

"People forget how hard fought, No. 1, getting the money was, and, No. 2, keeping the money was," Halford said. "As always, the present is over-represented (in the debate), and the future is under-represented."

The larger of two permanent fund bills, which would take $657 million from fund earnings in fiscal year 2004, has been held so far in the Senate Judiciary Committee.

The income tax bill has been moved to the Senate Finance Committee, although begrudgingly.

"This is the last thing I want to do - the very last thing," said Sen. Randy Phillips, an Eagle River Republican, as the State Affairs Committee passed the bill out. Phillips said he will vote against it on the floor.

"If it were to pass in this form, with these infirmities, I think we'd be looking at a citizen petition that would have it repealed in a heartbeat," said Committee Chairman Gene Therriault, a North Pole Republican.

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



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