FAIRBANKS - Facing off twice in Fairbanks on Tuesday, the two leading candidates for governor held fast to their strikingly different approaches to bringing state spending and income closer together.
Republican Sen. Frank Murkowski called Democrat Lt. Gov. Fran Ulmer's approach to the state's fiscal gap "a tax plan" while Ulmer said Murkowski's refusal to consider taxes endangers the state's economy and Alaska Permanent Fund dividends.
The two met at a noon forum sponsored by the Greater Fairbanks Chamber of Commerce and later in a public television debate sponsored by KUAC-FM and the Fairbanks Daily News-Miner. The second debate was broadcast statewide on public TV and radio.
Murkowski said the state deficit is likely to be $500 million rather than $1 billion this year because of higher oil prices. He said the state's $2.4 billion Constitutional Budget Reserve fund would provide enough time to develop other revenue sources and find savings in state government. He refused to talk about taxes and said he would not consider using the earnings of the Alaska Permanent Fund without a vote of the people.
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Ulmer said failing to accept a statewide tax in the face of the expected deficits would force the state to use so much of the permanent fund's earnings that the dividend would be eliminated. Without a broad-based tax as an option, the state could face an economic meltdown similar to the mid 1980s when it slashed spending, she said.
Asked at the Chamber debate what he would do to close the state's fiscal gap, Murkowski suggested greater resource development, particularly oil and gas.
"If you don't have a mindset that you can grow the economy, then you're going to simply tax the people," he said.
In the public television studio, Murkowski described the oil boom in the Russian Far East as an example of what Alaska could be doing.
A reporter posing questions in the studio debate observed Murkowski's recent fiscal policy speech called for 3 percent annual growth in state oil and gas revenues through 2005. With state revenues from the industry at $1.1 billion, that would amount to $33 million a year, far short of the expected $500 million deficit. Where would the rest of the money come from, he was asked.
"Well, what you do is you draw down on the budget reserve," Murkowski said. "But you don't draw down a billion dollars because you don't have to. The price of oil has allowed us to probably draw down on that account somewhere in the area of $500 million. You've still got $2 billion left."
Murkowski said fisheries, timber and mineral development are other options.
Ulmer said the state earns about $5 million from mining and $1 million from timber annually. Those numbers would have to increase 100 times to fill the looming fiscal gap, she said.
"The numbers don't add up," she said of Murkowski's approach.
"Sen. Murkowski likes to talk a lot about attitude. Attitude is important. But attitude alone simply doesn't cut the mustard," she said after Murkowski urged a vote in his favor for his positive outlook. A responsible approach to the state's budget "means being able to close the fiscal gap with something more than hot air," Ulmer said.
Ulmer said she favored a cap on state spending except for adjustments for inflation and population growth. She said she would establish a statewide tax if the Constitutional Budget Reserve falls below $1 billion. And she promised to protect the dividend.
"When I hear Sen. Murkowski talk about his solution, what I really hear is that your dividend is going to go away. Because that's the only way the math works," Ulmer said.
Green Party candidate Diane Benson attended the chamber debate and walked to the podium holding her campaign sign when Murkowski and Ulmer were called up, the Fairbanks Daily News-Miner reported. At the television debate, she was not allowed in the studio and UAF security officers were called when a small crowd gathered.
The three other candidates for governor also were not invited to the debates: Don Wright, Alaskan Independence Party; Billy Toien, Libertarian Party; and Raymond Vinzant, Republican Moderate Party.
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