Tax hike, dividend cap OK with chamber crowd

Posted: Tuesday, January 08, 2002

ANCHORAGE (AP) -- A majority of those at a Chamber of Commerce luncheon Monday said they favored raising taxes and shrinking the Permanent Fund dividends to close the state's looming fiscal gap.

But Senate President Rick Halford says he doesn't think the informal poll reflects the public's view.

''I don't believe they believe we are facing a fiscal crisis,'' Halford said. The show of hands came from insiders, he said.

He and House Speaker Brian Porter had been invited to preview the legislative session, which opens Monday. Balancing the budget in the face of declining oil income will be a main piece of business, or at least debate.

The Department of Revenue estimates the state will spend its Constitutional Budget Reserve and wind up with an annual shortfall of more than $1 billion by 2005 if oil prices stay around $19 a barrel.

Monday's exercise, led by Porter, gauged support for ideas to reverse the state's trend of spending more than it earns.

Among the 155 attendees at the luncheon, most hands went up for a 10 cent-a-drink alcohol tax. About half the hands rose for a 3 percent state sales tax. More than half rose for a 3.4 percent state income tax. Almost all raised their hands to cap the annual Permanent Fund dividend at $1,250 and use the savings for the state's general fund. A scattering, perhaps one-fifth, raised hands for a $50 cruise ship head tax. Only a couple of hands went up for a 30 percent increase in oil taxes.

Porter says he might support some legislative mechanism that would trigger new taxes, for example, once the state spends a certain amount of its reserves. Porter said some taxes may be approved this session. Halford predicted that some proposals will be approved eventually.

The fact that this is an election year might complicate things. Halford said some members of the Republican-controlled Senate want to wait to see who is elected governor. U.S. Sen. Frank Murkowski is a leading Republican candidate.

''I would tend to have more confidence in Sen. Murkowski's ability to hold spending down,'' Halford said, though he said he remains undecided about waiting.

Porter said he didn't see an advantage to working with one front-runner over the other. Lt. Gov. Fran Ulmer is a leading Democratic candidate for governor.

Monday's speeches offered a glimpse of the two leaders' legislative priorities during this year's session and their ideas about which bills might be passed.

One proposal that stands a chance is a local priority for subsistence hunting and fishing, Porter said. The change could be a breakthrough on an issue that has been deadlocked for years, he said.

If the Legislature approves the change, it would also require a public vote.

Federal law requires a rural preference for subsistence, The state constitution says there should be no preference.

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