Murkowski lays out four-part fiscal plan

Posted: Tuesday, October 15, 2002

ANCHORAGE - If elected governor, Republican candidate Frank Murkowski says he immediately will order an audit of all state agencies to review their effectiveness.

Controlling state spending and jettisoning ineffective programs are two parts of Murkowski's four-part fiscal plan, laid out in a speech Monday at the Petroleum Club in Anchorage.

The 22-year U.S. senator again said Alaska is not facing a budget crisis, despite what many of his own party's state lawmakers, his Democratic opponent and "some of the Anchorage media" are saying about the difference between state spending and income.

"They say we are facing a billion-dollar deficit and that the only solution is to impose a tax on hardworking Alaskans," Murkowski said.

The situation is no different than 1987 and 1992, Murkowski said, when advocates of big government used dire budget predictions to call for an income tax or caps on permanent fund dividends.

Fran Ulmer, the Democratic gubernatorial nominee and current lieutenant governor, said Murkowski's assessment of the state budget problems is wrong.

"I don't know if he hasn't looked at the numbers or if he's intentionally trying to mislead people," Ulmer said.

She said she saw nothing new in Murkowski's speech, other than a promise he would not spend earnings of the Alaska Permanent Fund without voter approval. Ulmer has insisted on the same requirement.

Murkowski said the state this year faces a budget gap of about $500 million. He called that a challenge, not a crisis.

Half of his four-part fiscal plan to deal with that challenge is aimed at current state spending.

"It is time to balance our state budget just as every Alaska working family must balance theirs," he said. He promised to do so with the governor's line-item veto and a requirement to identify funding sources for all new spending.

Using the audit of all state agencies, Murkowski pledged to stop funding programs that are not effective or efficient. He said he would demand agencies submit ranked spending proposals.

Ulmer said budget cutting will not close the gap.

"Every group that has looked at the problem has come to the same conclusion," she said. "We cannot cut our way out of this problem" unless Alaskans want to diminish basic services such as education and road maintenance.

Ulmer said even the pro-business Resource Development Council acknowledges the budget gap. She pointed to the organization's August newsletter, in which executive director Tadd Owens said budget discipline must be the first priority in any fiscal plan but "the gap between revenues and expenditures is far too large to be addressed solely through cuts."

To stabilize revenues, Murkowski said, he would evaluate the benefits of an oil price protection program, also known as hedging.

"We can reduce the risk to the state of a fall in oil prices by locking in the price we get for our royalty oil when prices are high," he said.

Stable revenues and wise management of the constitutional budget reserve, the state's savings account for filling in the gap between earnings and spending, will give Alaska time to increase revenue from resource development, Murkowski said.

The GOP candidate said he will make fundamental changes to oil and gas policies reflecting the mature nature of North Slope fields.

He said he would make more land available and encourage more companies to invest in exploration, increase time available for exploration, demand development of known commercial reserves on state leases and increase lease sale revenue through technology, access and infrastructure.

For timber development, Murkowski said, he would initiate exchanges with the federal government to create a new state forest in Southeast Alaska.

"The new state forest would provide greater economic stability for the region and at the same time deliver a revenue stream to the state," he said.

Ulmer said Murkowski's estimates of earnings from resource development were unrealistic.

"We all want more resource development ... but it doesn't close the fiscal gap," she said.

In addition to the promise not to spend permanent fund earnings without a popular vote, Ulmer's fiscal plan calls for a spending cap, with increases allowed for growth in inflation and population, and additional state revenue delivered via a "parachute plan." The plan would institute new tax measures, to be determined with legislators, if the constitutional budget reserve falls below $1 billion.

Asked after his speech what his priorities in state government would be, Murkowski mentioned a need for the Department of Administration to initiate efficiencies and the Department of Fish and Game to hire topflight biologists because of their importance to the fishing economy.

"It's very, very hard as an outsider to specifically generalize on what cuts you'd make, but I was out somewhere and saw a state Department of Natural Resources boat with its gear that had been sitting there for five years. ... Obviously there's not much need. How much of that is duplication that's around the state, obviously I don't know," Murkowski said.

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