Donley calls for state hiring freeze

Posted: Sunday, January 13, 2002

ANCHORAGE (AP) -- Sen. Dave Donley is urging the Knowles administration to freeze hiring of new state employees for nonessential positions.

The Anchorage Republican, co-chairman of the state Senate Finance Committee, also wants Knowles to ask all departments to develop plans for emergency spending cuts.

Because of a drop in oil prices, the state faces an $865 million shortfall in revenue to cover this year's spending. That's more than one-third of the budget.

''This is a fundamental first step to exercising fiscal responsibility,'' Donley said.

Knowles budget director Annalee McConnell said the administration will grant neither of Donley's requests.

''We're not in an emergency situation,'' McConnell told the Anchorage Daily News. A hiring freeze would hurt already overloaded state services such as permitting at the Department of Natural Resources or the Department of Environmental Conservation. McConnell said no emergency spending plans have been created for the state's different agencies.

Oil prices have fallen about 30 percent in the past year, leaving the state far short of the money needed to cover general fund spending. The state, however, has a $2.8 billion reserve account that the Legislature has used to cover budget needs in recent years. On Wednesday, Knowles plans to outline his plan to raise new revenues to cover future shortfalls.

The proposed Knowles budget would increase current state spending by $180 million, adding 8 percent to this year's $2.4 billion general fund budget.

About $100 million of the increase is needed to replace lost federal funding or grants. The remaining increase is for the University of Alaska and children's health and safety and other programs.

Republican leaders, who have criticized the proposed increased, want a constitutional amendment to limit state spending. They also want further cuts in state programs before passing major new revenue measures such as income taxes.

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