Fix for fiscal gap headed to voters - or not?

Murkowski pushes constitutional change, but lawmakers could take action instead

Posted: Wednesday, June 23, 2004

Gov. Frank Murkowski sent mixed messages Tuesday on whether he is still insisting on a vote of the people before allowing Alaska Permanent Fund earnings to be spent on state government.

Murkowski is asking lawmakers to approve constitutional amendments - which would require a vote of Alaskans - that would change the way payouts from the fund are calculated, provide $625 million for state and local governments and guarantee dividends for individual Alaskans.

Murkowski was pushing his plan Tuesday before the Senate Finance Committee during the first day of a special session he called to seek a solution to the state's chronic budget gap.

Sen. Con Bunde, R-Anchorage, asked Murkowski what his reaction would be if lawmakers approved a statute - not requiring a public vote - that would accomplish most of what Murk-owski's constitutional proposal would.

Bunde suggested such a plan would include earnings from the $27.8 billion fund.

"Clearly my reaction would be you've got this authority," Murkowski replied. "That's a legislative right."

Murkowski said he's always felt if lawmakers are going to change the fund itself, that would require a vote of the people, but if they were going to use the authority they have always had to spend its earnings on government, that would be their right.

In the past Murkowski has pledged not to spend earnings from the oil wealth savings account without a vote of the people.

Lawmakers can legally spend earnings from the fund - but not the principal - with a simple majority vote in the Legislature. For years, they have been reluctant to do so for fear of political backlash.

After Murkowski left the meeting, reporters asked him to clarify whether he would allow legislators to fund a substantial portion of the budget with permanent fund earnings - or whether he would veto such an appropriation if it came without a public vote.

"I'll make up my mind," Murkowski said. "It depends on what it is."

He said he's not changing his position that any change in the fund itself would require a public vote, but he appeared to draw a distinction between the principal of the fund and the earnings.

He then asked reporters if he needed to clarify anything else. His chief of staff, Jim Clark, said he did. Clark said it's been the administration's position that a vote of the people is necessary before spending earnings as well as principal.

But the governor protested that's not his position, and again discussed the distinction between earnings and principal.

Clark then hustled the governor away from reporters.

Several minutes later, the governor's communications director, Kevin Jardell, appeared outside the Finance Committee meeting, saying the governor had asked him to clarify his remarks.

The governor has not changed the position he took during his 2002 election campaign, Jardell said.

"He does not support spending earnings without a vote of the people," Jardell said.

Jardell did not say that categorically means the governor would veto legislation that uses the earnings.

"If a piece of legislation moves and we have something specific, we'll talk about the specifics of that," Jardell said.

"But the governor believes the people should have a vote prior to the earnings being spent."

Bunde said his impression from his Finance Committee exchange with Murkowski was that the governor would go along with a plan that uses fund earnings without a public vote. Bunde noted he did not press the governor for an answer on whether he would veto such a plan.

Senate Finance Committee Co-Chairman Gary Wilken, R-Fairbanks, disagrees that a constitutional amendment is required to take care of the state's budget problems.

He contends the state should fill any budget gaps it has in the next several years by using a combination of permanent fund earnings and the state's $2 billion constitutional budget reserve. He plans to make a presentation on that idea this morning.

The Finance Committee had initial hearings Tuesday on the governor's fiscal proposals, but took no action on the measures.

Also on Tuesday, the Senate Labor and Commerce Committee approved the governor's proposed $1 a pack hike in cigarette taxes. The tobacco tax bill now moves to the Senate Finance Committee.

House committees held no hearings Tuesday.

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