2 fixes for budget gap in trouble

On the line: Alcohol tax hike, spending cap

Posted: Monday, May 13, 2002

A plan to significantly increase Alaska's alcohol tax may be on the rocks. And the same may be true for a proposal to cap state spending.

The two plans were considered the most likely to pass among a group of bills and resolutions aimed at dealing with an estimated $963 million state budget shortfall. But they could follow the fate of other legislation expected to fail this year, including an income tax and a plan to use earnings from the Alaska Permanent Fund.

The proposal to increase the state's alcohol tax by 5.6 to 6.7 cents to a total of 10 cents per drink passed the House and was greeted with general support in the Senate.

With only one and a half days left in the session, and a plethora of pet bills touted by Senators sitting idle in the House, it appeared in trouble.

Republicans late Sunday attempted to move the tax plan back off the Senate agenda and to a committee without voting on the measure, sparking some tense moments as Democrats attempted to force them to show their hand.

Senate Minority Leader Johnny Ellis urged a floor vote and railed at the plan to send the alcohol tax back to the Senate Rules Committee. He complained some

Republicans were making public statements in support for the plan, but then protesting it in private party caucuses.

Senate President Rick Halford, a Chugiak Republican and a consistent supporter of the measure, worked Sunday to muster enough votes to pass it. But in the end, the Senate adjourned late Sunday without taking action.

A few weeks ago, Halford said a majority of his 14-member caucus backed an alcohol tax. Asked Sunday whether that support is still there, he said, "I don't know. I don't know.

"I think a majority of the caucus clearly would like to vote on that issue," Halford said, offering no indication whether they would vote for or against it.

The alcohol tax increase could become an end-of-session bargaining chip to sweeten the deal for a host of other measures that must be resolved before the Legislature adjourns Tuesday.

Meanwhile, a Senate plan to put a constitutional amendment on the November ballot that caps state spending is in trouble in the House because the Senate won't vote on revenue-raising measures such as the income tax.

Senate Republicans sought a plan to impose a 2 percent cap on increases in state spending that could rise to 4 percent with a three-fourths vote of the Legislature. Senate Joint Resolution 23 would generally hold the growth in state spending between $66 million to $71 million annually with a simple majority vote of the Legislature.

House lawmakers who approved an income tax that raises about $250 million, and a new calculation in the permanent fund program that splits earnings equally between government and dividends, generally called the cap an inadequate response to the state's deficit.

"From our standpoint it was kind of assumed all the way along," said House Finance Co-Chairman Eldon Mulder, an Anchorage Republican. "If they wanted us to take up spending limits they would need to take up a revenue package."



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