Governor cuts $5.2 million in state spending

$1 million taken from ferry system

Posted: Wednesday, July 21, 2004

Gov. Frank Murkowski announced $5.2 million in cuts to the state budget Tuesday, a fraction of the $138 million he vetoed in state spending last year.

Murkowski signed the budget on Monday, waiting more than two weeks after the start of the fiscal year. He had said he planned to search for additional cuts of up to $17 million, the amount the budget increased from last year.

The $2.3 billion budget is based on a Department of Revenue analysis projecting oil averaging $28 a barrel through June 2005.

Record-high oil prices prevented significant budget cuts and helped facilitate a $90 million increase in funding for K-12 education and the University of Alaska. Murkowski said additional belt-tightening within state departments also helped curb significant vetoes.

"We're examining everything the state buys, from sticky note- pads to asphalt," Murkowski said.

The budget adds 20 Alaska State Troopers, nine criminal prosecutors, 25 positions to the state Division of Oil and Gas and returns $50 million to the state savings account, the Constitutional Budget Reserve. In recent years, the budget reserve has been used to fill a chronic budget gap in state spending.

The $5.2 million in vetoed funding includes:

• $1 million to the Alaska Marine Highway System.

• $375,700 in departmental travel budgets.

• $904,500 for state vehicles.

• $169,400 for the Alaska State Library and state archives.

• $193,000 from the Office of the Governor.

• $471,200 in fiscal notes for various bills.

• $700,000 for the Alaska Travel Industry Association.

• $62,500 in grant money for the Alaska Legal Services Corporation, which provides legal assistance to the poor.

The state also saved more than $1 million in Public Safety Employees Association salary and benefits increases that were not ratified by the union's membership.

The $1 million cut to the state ferry system was based on projected savings from privatizing parts of the ferry system.

Contracts recently agreed to by three maritime unions include significant pay increases for workers in exchange for privatization of service to some smaller communities in Southeast. The ferry system's budget, including an $8 million supplemental appropriation from the Legislature, now totals $39 million.

"The indications we've gotten is that some of the private sector folks believe that they can do it for significantly less cost," said Department of Transportation spokesman John Manly.

The contracts, however, have not yet been ratified by the membership of the three maritime unions.

Rep. Bruce Weyhrauch, R-Juneau, said if the union members don't agree to the contracts, the Legislature might have to replace the vetoed money with a supplemental appropriation next year.

"We might have to come back with a supplemental for three or four times that," he said, noting increased fuel costs due to high oil prices and additional costs associated with the grounding of the state ferry LeConte earlier this year.

Weyhrauch questioned the administration's decision to wait until after the start of the fiscal year to sign the budget bill considering the relatively small vetoes.

"I don't know why this took so long," Weyhrauch said. "We waited this long for this?"

Senate Minority Leader Johnny Ellis, D-Anchorage, said Murkowski's small cuts were a result of his daughter U.S. Sen. Lisa Murkowski's re-election campaign.

"I certainly expected significant budget cuts because he didn't get access to the (Alaska) Permanent Fund," Ellis said. "The only conclusion I can make is it's an election year. I think the people are about to send a message to the Murkowski family in November."

The $700,000 cut from the Alaska Travel Industry Association was a result of the organization's inability to raise a $6 million match to acquire $4 million in state funding in 2004.

ATIA President Ron Peck said the $700,000 loss will prevent ATIA from running some national magazine and television ads promoting Alaska as a vacation destination.

"Maybe some consideration should be given to what that split amount is," Peck said. He noted that a bill passed by the Legislature this year would make the split 50-50 rather than 60-40, but it has not yet been signed by the governor.

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



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