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Senate: Gap closure unlikely

Posted: Wednesday, February 06, 2002

JUNEAU -- It's unlikely any major tax measure will pass in the state Senate that closes Alaska's billion dollar budget deficit, Senate President Rick Halford said Tuesday.

Instead, budget leaders should look at across-the-board cuts in state services and other spending controls to win favor from the public for new taxes, said Halford, a Republican from Chugiak.

''The object is to gain some credibility with the public,'' he said.

Halford again chided Gov. Tony Knowles for proposing about a 7 percent increase in state spending for the next fiscal year.

He said Senate Republicans this year want a constitutional amendment on the November ballot to cap state spending and cuts in Knowles budget.

''And I think you also have to put some reductions (in state spending) on the table that people consider important enough that they are willing to contribute to avoid,'' Halford said.

The Legislature has cut more than $200 million from the state general fund since 1997.

Despite the cuts, Alaska still spends more than it raises. And in recent years oil revenues -- which account for about 80 percent of the state's income -- have been on the decline.

The state Department of Revenue estimates the state will have a $865 million budget deficit this fiscal year that will grow to $1.1 billion by 2003.

Revenue officials anticipate the state's $2.3 billion Constitutional Budget Reserve, which has made up for past shortfalls, will be empty by 2004.

But Halford said there is no support for significant tax increases and no agreement from the public that Alaska's budget problems are real.

''And you can't turn around and shove things down people's throats when they don't believe the problem exists,'' he said.

Earlier this year, Gov. Tony Knowles proposed an 18 percent income tax along with an increase in the alcohol tax and a new $30 per-passenger tax on cruise ships to raise $400 million.

It is part of a three-year proposal to raise $1.2 billion in new state revenues to close the state's so-called ''fiscal gap.''

Republican leaders in the House and Senate have not endorsed the plan offered by Knowles, a Democrat in his last year in office.

But House Republicans met last week in a closed-door caucus with Democrats to begin formulating their own bipartisan plan.

Adding to the political strain of new taxes is a November general election where all but three seats in the 60-member Legislature are up for election.

House Speaker Brian Porter, R-Anchorage, said members of his chamber intend to formulate a long-range plan regardless of whether it is considered in the Senate.

Porter said most House members favor the speed of Knowles plan to raise one-third of the revenues necessary to begin closing the deficit.

''We'll pass, I hope, something that will be a meaningful start of a plan,'' Porter said.



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