Ulmer unveils her three-part fiscal plan
EAGLE RIVER - Democratic gubernatorial nominee Fran Ulmer stepped into Republican country Wednesday to announce her three-part fiscal plan for Alaska.
In a speech to business owners and operators in conservative Eagle River, which sports an all-GOP delegation in the Legislature, Ulmer incorporated a fiscal suggestion popular recently with Republicans.
She called for a spending cap, with increases allowed for growth in inflation and population.
She also promised to veto any budget that involves spending earnings of the Alaska Permanent Fund, unless such spending was approved by voters.
And she advocated additional state revenue delivered via a "parachute plan." The plan calls for new tax measures, to be determined with legislators, to kick in if the state's main savings account, the Constitutional Budget Reserve, falls below $1 billion.
Ulmer said she chose to announce the plan at the Chugiak-Eagle River Chamber of Commerce because small business owners are concerned with finding a fiscal plan that avoids a state government crisis.
Without a fiscal plan, Ulmer said, legislators will take earnings of the permanent fund to pay for government when savings accounts run out.
"Our state would be forced, as its only option, to crash into the permanent fund earnings and there goes our dividends in what would be the most outrageously regressive income tax of all," she said.
A spending limit was pushed by Republicans last year and fought by Gov. Tony Knowles.
State Sen. Loren Leman, an Anchorage Republican and running mate of GOP gubernatorial nominee Frank Murkowski, said the speech was one he could have written. Leman said Ulmer is coming late to the table with calls for restraints on the size of government.
"She was nowhere to be found in support of a smaller, smarter government," Leman said.
Ulmer's proposed constitutional spending cap would require approval by Alaska voters. If no cap is approved, Ulmer pledged to hold the line on spending through the power of the governor's office.
The Constitutional Budget Reserve, set up in 1991, has been used to close the gap between income and spending for all but two annual budgets. The reserve Wednesday contained $2.307 billion. The Department of Revenue projects it will run out in about two years.
Ulmer said action must be taken before the reserve is drained.
"The size of the deficit is too large to close with cuts alone," Ulmer said, "unless people really don't mind more crowded schools, or roads and parks closing, or offices emptied, or to see the state's infrastructure, public safety and economy weaken dramatically."
Her parachute plan would kick in with new taxes when the reserve dropped below $1 billion. She said she would ask legislators to consider all possible taxes, from sales and income taxes to increased fees and additional corporate taxes.
"The Legislature would rank these revenue measures starting with the least offensive to the most offensive," she said.
She held off listing taxes she personally deems "least offensive" because previous specific suggestions have been deemed "dead on arrival."
The new taxes would disappear once the reserve again contained at least $1 billion.
Leman criticized Ulmer for not listing specific taxes she prefers.
"She basically has laid out her backdoor approach to taxes," he said.
GOP nominee Murkowski called Ulmer's plan "no plan at all, but an effort to continue expanding state government while hoping the Legislature will impose the taxes necessary to fund it.
"She essentially promised to continue the 'spend now, tax later' policies she and Tony Knowles have pursued for the last eight years, only she's trying to package it as a fiscal plan," he said in a press release.
Murkowski said Ulmer's "parachute plan" would allow the state to spend the Constitutional Budget Reserve down to $1 billion, then hold the Legislature responsible for levying taxes.
"This is not surprising, since she has advanced an income tax on many occasions," he said.
Murkowski said his approach to bridging the budget gap is to control state spending by making government more effective and increase revenue through projects and actions promoting natural resource development such as logging and mining.
Rep. Fred Dyson, the Eagle River Republican now seeking a Senate seat, heard Ulmer's speech in person. He was among Republicans last session who advocated a plan to automatically trigger a tax increase and budget cuts when state revenues fell to a predetermined level.
Dyson said most Alaskans fear that once a tax is put in place, it will increase. A parachute plan would put in place a mechanism for a tax going down, or going away.
"If we could make that work, that would be some comfort," Dyson said.