Gov. Frank Murkowski proposed a new municipal revenue-sharing program Thursday that would use earnings from a reserve account invested in the Alaska Permanent Fund.
Cities have pressured the state to reinstate a revenue-sharing program that was in effect for 25 years until cut by the Murkowski administration in 2003 to balance the budget.
Several municipalities are struggling to pay electric and phone bills, due to rising fuel costs, and insurance, workers' compensation and pension plans costing more over the years.
Murkowski suggests spending $27 million annually for the program with money from a settlement with oil companies known, as Amerada Hess. The account is expected to collect $27 million in the 2007 fiscal year.
The account does not contribute to permanent fund dividend earnings that are given to Alaskans each year.
"The state can help, but that help should be permanent and not subject to the yearly ups and downs of general-fund revenue. It must be long-term; it must be sustainable. This approach meets those challenges," said Murkowski, in a statement.
He spoke to city leaders gathered in Anchorage for the Alaska Municipal League annual conference.
The governor, calling his plan a Community Dividend Program, said $10 million would be given based on population with all boroughs receiving $50,000 and cities getting between $25,000 and $40,000.
The remaining money will be dispersed among boroughs according to population.
Senate Republicans voiced their support of the governor's plan and said in a written statement they would strongly consider approving it in the next session starting in January.
But Democrats question Murkowski's idea because he's not using money from a windfall surplus expected next year based on tax collected on high oil prices.
"Why should we use permanent fund money in a year when we have a $1 billion surplus," said Rep. Berta Gardner, D-Anchorage.
Gardner and two other Democratic lawmakers proposed a bill that would reinstate the revenue-sharing program with $69 million, and allow money given to cities to be spent on offsetting property taxes.
"Murkowski's been dying to get his hands on the permanent fund since he was elected," said Rep. Les Gara, D-Anchorage.
Legislators tapped the Amerada Hess account for the first time last session, spending $57 million for construction projects.
Rep. Nancy Dahlstrom, R-Eagle River, who was ousted from her party for voting against the budget that spends the Amerada Hess money, said any money taken from the permanent fund should be approved first by the public.
Kevin Ritchie, executive director of the Alaska Municipal League, did not pick which one he supports but said he is pleased to see ideas discussed.
"Everybody is working on something, which is good news," he said.
Andrew Petty can be reached at email@example.com