Governor eyes $230 million in cuts, new funds

Murkowski meets with legislative leaders to discuss next year's budget

Posted: Tuesday, December 09, 2003

The Murkowski administration is considering about $230 million in cuts and new revenues in next year's budget to extend the life of the state budget reserve, Republicans said.

Gov. Frank Murkowski and other administration officials have been outlining the budget for next year with lawmakers over the past two weeks.

Murkowski met with House Minority Leader Ethan Berkowitz and Rep. Eric Croft, both Anchorage Democrats, for about two hours at his residence on Monday where he briefed them on his budget, they said. Neither would talk about specific proposals that the governor is expected to outline in a budget address.

The governor met with House and Senate Republicans last Thursday during meetings in Anchorage.

House Speaker Pete Kott, an Eagle River Republican, said he expects the governor to continue to reduce state spending in most areas while increasing spending on public safety and transportation.

Administration officials said they expect about $155 million in increases, which Kott characterized as nondiscretionary increases through formula-driven programs such as Medicaid, that must be balanced with cuts, Kott said.

"He's asked the agencies to absorb it," Kott said.

In addition, the state must find about $75 million in new revenues to limits its draw from the Constitutional Budget Reserve, Kott said.

The administration had previously said it would draw no more than $400 million from the state's dwindling reserve account and at the same time spend less on state government. In short, it would have to absorb the $155 million in increased costs and find $75 million in revenues to limit its draw from the reserve.

It's unclear what new revenues the administration might be looking for, Republicans said.

"I don't know if he was rolling it out, so much as feeling us out," said House Majority Leader John Coghill, a North Pole Republican.

The administration mentioned a few revenue-raising measures such as gaming or tourism taxes, Coghill said. A sales tax is not expected to emerge in the coming session, which begins Jan. 12, Republicans said.

"I don't think at this point the sales tax will emerge. I don't think the administration will propose it," Kott said.

The administration had proposed a seasonal sales tax and backed a year-round sales tax offered by the House Ways and Means Committee. Both measures failed to clear the Legislature.

Senate President Gene Therriault, a North Pole Republican, also said a broad-based sales tax is not expected to surface. Therriault said the projected budget gap is expected to be well under $100 million.

Last legislative session, the administration cut about $138 million from the budget, including aid to communities and $47 million in longevity bonus payments to seniors to balance spending.

Alaska relies on oil for about 80 percent of its revenues, but while prices have been high, production has been declining in recent years.

Murkowski has pushed for more oil and gas development as a way to fill state coffers. The process could require several years to take effect. Meanwhile, the administration is trying to extend the life of its $1.9 billion budget reserve, which it depends upon to balance state spending.

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