Gov. Frank Murkowski is backing off talk of cutting $250 million from next year's budget.
In a recent speech to a statewide conference of local government leaders, Murkowski said, "The conference packet says I will cut $250 million from the budget this year. Not so."
That statement is a shift from the deep budget cuts predicted earlier this year by senior Murkowski administration officials.
The governor is holding to his bottom line: He plans to draw no more than $400 million from the state budget reserve and reduce total general fund spending.
But to find the $250 million or so needed to meet that target, he says, he will propose a combination of cuts and taxes or user fees. The governor will present an outline of his budget on Dec. 15.
Earlier this year, in a preview of next year's financial picture for legislators, Murkowski's budget chief, Cheryl Frasca, said: "We'd like to hit about $250 million of further reductions. So we have an ambitious summer project."
Murkowski Chief of Staff Jim Clark later confirmed the number at a press conference. "That's our target," he said.
But Murkowski spokesman John Manly said last week that $250 million in cuts was never a real focus in writing the next budget. "I realize it came out sounding that way," he said.
Manly said that cutting that much out of the budget would devastate state services.
Right now the governor is riding high on oil prices that are much stronger than predicted, lessening his need to take drastic measures to get the budget under control. His budget planners figure that higher oil prices will mean about $100 million more for the state.
A new official oil revenue forecast is expected soon.
Murkowski told the Alaska Municipal League at a speech in Nome earlier this month that the spending proposal he announces in December will come in lower than what the state is spending in the current year.
That would mean $100 million or so in cuts just to make up for the expected increased costs in areas like public employee retirement and formula-driven programs like Medicaid, according to budget projections.
But Frasca, Murkowski's budget chief, downplayed the effect of the cuts. There will be a focus on consolidating bureaucratic work and on seeking more federal money to spend instead, she said.
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