Knowles urges budget plan, minimum wage increase

Posted: Thursday, January 11, 2001

JUNEAU (AP) -- Gov. Tony Knowles called Alaska strong, but urged lawmakers Wednesday to strengthen it by jump-starting a natural gas line, pumping money into education and boosting the minimum wage.

In his annual State of the State speech, Knowles also proposed a budget-balancing plan that would kick in as cash reserves dwindled and he renewed his call for a constitutional amendment to reconcile state and federal subsistence laws.

''Let's put Alaskans to work,'' Knowles said. ''Provide excellence in education for all Alaskan children. Let's protect children and families. Let's preserve the subsistence way of life. And let's take the steps today that we need to balance our budget tomorrow.''

As expected, Knowles made a proposed gas line from the North Slope the centerpiece of his speech. Rising energy costs in the Lower 48 have raised hopes that a line will be built, bringing jobs, taxes and royalties into the state.

''I believe Alaskans can be on the working end of a shovel building a natural gas pipeline within two years,'' Knowles said. ''After two decades of false starts and broken dreams, the economic and political stars are finally aligned in our favor. Natural gas is the fuel of the 21st century.''

He also held out hope that George W. Bush's election to the presidency would bring about the opening of the Arctic National Wildlife Refuge to oil development and praised President Clinton for not giving the refuge extra protection.

''Alaskans can finally rest easy now that the Clinton administration has heard Alaska loud and clear, agreeing earlier today not to make ANWR a national monument,'' Knowles said.

But Knowles, a Democrat, also pushed the Republican-dominated Legislature to approve his more controversial proposals, including about $145 million in budget increases, a subsistence amendment and a delay in the date when Alaska students must pass an exit exam to earn a high school diploma.

Majority Republicans praised the governor's upbeat tone, but questioned the cost of his proposals. Their analysts say the increase is more like $200 million.

''We agree with a lot of the warm wishes in his wish book, but they're wishes,'' said Senate President Rick Halford, R-Chugiak. ''The devil's in the details and the dollars.''

Knowles noted that only a third of the sophomores who took the test in the spring passed the math exam.

''This is serious,'' Knowles said. ''We face the prospect that up to two-thirds of our high school students aren't on track for a diploma under the current exit exam law. That's neither acceptable, nor fair.''

He called on lawmakers to approve $16 million more for K-12 education.

House Speaker Brian Porter, R-Anchorage, acknowledged that the sophomores' results were troubling, but wondered whether the sophomores had yet been exposed to material in class for a test that is intended to be passed by seniors.

Knowles proposed the minimum wage increase -- currently the lowest on the West Coast at $5.65 -- as an extension of the state's ongoing welfare reform program, which has moved thousands of people into the workplace.

''So I am asking you this year to increase Alaska's minimum wage to $6.40, raise it again the following year, and then tie future increases to inflation,'' Knowles said. ''Working for a minimum wage in Alaska shouldn't mean a minimum quality of life.''

Republican leaders refused to rule out a minimum-wage increase, but seemed dubious about the automatic inflation increases.

''I think that might have a bit of difficulty,'' Porter said.

Among minority Democrats, Knowles' speech drew praise for touching on their continuing themes of improvements in education, public safety and economic development.

''I think that the overall theme is we need to continue moving Alaska forward,'' said Rep. John Davies, D-Fairbanks. ''We can't rest on our laurels from the past.''

Knowles renewed his call for a long-term plan to closed the gap between state revenue and spending with a combination of broad-based taxes and earnings of the Alaska Permanent Fund, but with a twist.

He suggested imposing such a plan only when the budget-balancing Constitutional Budget Reserve dwindles to $1.5 billion, but didn't spell out details of a tax or a tap on the fund's earnings. Two years ago, the Legislature rejected his proposed income tax.

House Finance Committee Co-Chairman Eldon Mulder, R-Anchorage, quickly brought up the public's resounding rejection two years ago of the Legislature's alternative plan to balance the budget with Permanent Fund earnings.

''We have to have public consensus and engage the public before we put forward another plan,'' Mulder said. ''If there's one thing we learned ... it's that the public isn't there.''

Some lawmakers argued for quicker action.

''I wish we could just figure out a way to belly up and do it,'' said Davies, who was among a small group of lawmakers pushing a budget-balancing plan last year.

Knowles also renewed his call for a subsistence amendment, even though federal managers have already taken over management of subsistence fishing on most Alaska waters because the Legislature refused to send voters a constitutional amendment allowing a subsistence priority for rural hunters and fishermen.

''Many believe the prospects of resolution are slowly slipping away. Sides are hardening and federal managers are tightening their grasp,'' Knowles said. ''Let us finally bridge that gap, heal the wounds and begin a new era of understanding and respect.''

Halford, who is among the lawmakers most opposed to the rural priority, said the Legislature would consider any new proposals on subsistence.

Along with proposals for change, Knowles touted the state's successes, noting that:

--Annual earnings for the average Alaska family have increased to nearly $60,000.

--Home ownership, at an all-time high of 67 percent, exceeds the national rate.

--The Alaska Permanent Fund ended the fiscal year at a record $28 billion, producing the largest dividend ever.

-- Welfare rolls dropped to their lowest levels in a decade, saving $51 million over four years.

-- 15,000 more children get basic health care under the Denali KidCare program.

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