Lawmakers to push budget amendment

House Republican, Democrat say measure an important step to long-term fiscal plan

Posted: Thursday, December 30, 2004

ANCHORAGE - Two House lawmakers are proposing a balanced budget amendment to the state constitution, which they say is an important first step to a long-term fiscal plan.

House Minority Leader Ethan Berkowitz, D-Anchorage, and House Rules Committee Chairman Norman Rokeberg, R-Anchorage, are sponsoring the resolution, which has been pre-filed for the legislative session beginning Jan. 10.

Berkowitz and Rokeberg propose amending the section of the constitution that deals with appropriation limits to read: "General fund appropriations by the legislature shall not exceed anticipated revenue."

The resolution, if passed by the Legislature, would have to be approved by voters, which would make it a two-year process at least, Rokeberg said.

"It will force the Legislature to have the discipline it needs to balance the budget," Rokeberg said Wednesday. "Hopefully the people will have spoken on that and will demand that."

The sponsors say a balanced budget amendment by itself is not a fiscal solution but would spark new debate on a long-range plan. And the bipartisan sponsorship of the amendment could generate the momentum to pass a plan where others have failed, they said.

"It should send a signal that this is a serious proposition," Berkowitz said. "We need to do the things we agree on first. Otherwise we stagnate, and stagnation is bad for Alaska."

State budget shortfalls are typically covered by a rainy day fund called the Constitutional Budget Reserve, which is now worth $2.13 billion.

This year, revenue streamed in from record oil prices and kept the state from tapping into that reserve fund. But the price of North Slope crude has fallen from more than $50 dollars a barrel earlier this year to $36.91 on Wednesday, likely making that extra cash a one-time windfall.

That makes a long-term fiscal plan all the more necessary, most lawmakers agree. But they differ on what that plan should be - including the two sponsors of the balanced budget amendment.

Rokeberg said he supports a modified version of a plan that failed to pass the Senate last session.

The percent of market value plan, or POMV, would have changed the method for calculating distributions from the Alaska Permanent Fund. A bill accompanying the proposal called for splitting the money generated under the new formula between the government and dividends for residents.

Rokeberg said simplifying the proposal and presenting it as a separate constitutional amendment without instructions on how to allocate the funding would be more palatable to lawmakers and the public.

"There is general recognition that the concept is a sound one," Rokeberg said.

But Berkowitz said the Legislature should leave the permanent fund alone and focus instead on changing how the budget is put together, with more oil revenue going into renewable investments.

Every state but Vermont has some form of a balanced budget requirement, and 32 states have put those requirements in their constitutions, according to the National Conference of State Legislatures.

Cheryl Frasca, director of the state Office of Budget and Management, said the Alaska Constitution and statutes prohibit, with certain exceptions, the state from incurring debt, which has been interpreted as a balanced budget requirement.

"The way we've been balancing our budget has been through the CBR," she said.

The one-line amendment proposal does not address CBR spending, but Berkowitz said the resolution likely will be modified as it moves through the legislative process.

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