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Governor searches for up to $17 million in budget cuts

Murkowski postpones signing budget; deadline for approval is July 15

Posted: Friday, July 02, 2004

Gov. Frank Murkowski is waiting to sign the 2005 state budget while he looks for up to $17 million in cuts, the amount the budget increased from last year.

Murkowski spokesman John Manly said the governor had planned to sign the budget on June 30, during a bill signing ceremony in Kenai, but decided to wait while he looks for items to veto.

"He's looking to find some reductions," Manly said. "Not necessarily $17 million worth, but some."

Last year Murkowski cut $138 million from the budget, including the controversial elimination of the $45 million Longevity Bonus program for seniors and $22 million in municipal revenue sharing and Safe Communities.

State Budget Director Cheryl Frasca said she is working with the governor to find the cuts but gave no indication of where they'd come from. She said the administration has until July 15 to approve the budget, or 20 days from when it was sent to the governor for approval.

The $2.3 billion budget for 2005 is higher than expected, partly because of a $90 million increase in education funding, according to state budget analyst Joan Brown.

Brown said the $17 million in spending is based on a state Department of Revenue analysis that projects the price of oil averaging $28 a barrel through June 2005.

The 2005 operating budget, which pays the day-to-day costs of government operations, is set at $2.258 billion. The 2005 capital budget, which covers public works projects, is set at $8.8 million. The remaining balance is used to pay state debt and make other statewide appropriations, Brown said.

In 2004, the operating and capital budgets came in at $2.147 billion and $84.6 million, respectively.

The state will not draw on the Constitutional Budget Reserve - the state's savings account - for fiscal year 2004, which ended on June 30, spokesman Manly said.

The state has dipped into the reserve fund for nine of the last 11 years to cover a chronic budget deficit. Last year the state drew $371 million from the savings account. But record high oil prices this year have poured extra cash into the state coffers.

Manly said the decision to sign the bill late is based on a Department of Law opinion from 1989, saying the governor can wait to sign the budget if there is certainty that it will be passed.

"We did have a talk with the Department of Law and have been assured that there is no problem," Brown said.

• Timothy Inklebarger can be reached at timothy.inklebarger@juneauempire.com.



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