Thin spending plan slips through House

Posted: Tuesday, March 19, 2002

JUNEAU -- A $2.2 billion spending plan that makes deep cuts of many state services passed the House of Representatives on Monday, clearing the way for tax talks.

Republicans called the budget a responsible answer to a budget deficit that is expected to reach $1.1 billion by next year. Democrats counter that it goes too far and accused House leaders of threatening an economy dependent on state government.

''In a lot of ways they turned out to be the greenies' best friend,'' Minority Leader Ethan Berkowitz said, referring to environmentalists.

Berkowitz, a Democrat from Anchorage, said agencies that issue permits to the oil industry and other businesses, oversee the state's Bering Sea crab fishery and attract tourism are all hurt under the cuts.

House leaders are proposing more than $100 million in cuts for the next fiscal year that could force the state to close 28 state parks, cut ferry service and lay off or leave vacant more than 100 state positions.

By contrast, Democrat Gov. Tony Knowles proposed about $180 million in additional spending for next fiscal year along with a $400 million tax plan to begin closing the state's deficit.

Republicans called their spending plan a ''hold-the-line'' budget that sets the stage for talks in the House on how to close the state's budget shortfall, which is expected to be $865 million by July when this fiscal year ends.

About 80 percent of Alaska's government is funded by oil revenues that have been on the decline in recent years. Alaska's $2.3 billion Constitutional Budget Reserve has made up past shortfalls but is projected to be empty by 2004.

While lawmakers consider other ways to pay for state government -- competing income and sales tax proposals have been introduced this session -- Republicans in the House also pledged to reduce the size of government.

''We can't, as a government, afford all the programs we are providing today,'' Mulder said.

Democrats spent little time debating the budget on the House floor on Monday and did not attempt to delay the process by offering numerous amendments that were sure to fail.

Berkowitz said attempting to block the budget seemed pointless since Republican leaders had pledged to take up tax measures this week.

''We think this budget is too bad to be fixed and the fiscal plan is too important to be kept waiting,'' Berkowitz said.

The budget passed on a 26-11 party-line vote. Reps. Reggie Joule, Scott Ogan and Beverly Masek were absent.

The House budget reduces spending in every area of state government, imposing cuts on environmental and regulatory programs while largely preserving education and Medicaid.

Local schools would get $657 million in fiscal 2003 from the state's foundation formula along a modest increase in transportation assistance. But the Department of Education and Early Development would have to cut $1.3 million from its expenses.

The University of Alaska will get the same amount as this year's spending -- $195.5 million -- besides $4.6 million to replace anticipated lost funds. But universities were denied a $17 million increase and also would have to absorb $5.7 million for salary increases.

More than 100 state employees would also be cut -- including child social workers and Alaska State Troopers -- and up to 80 positions in Corrections would be vacant, state officials said.

Subsistence funding was restored by a House Republican amendment after public criticism against a plan to eliminate the state Division of Subsistence. (See related story, page A-1.)

The plan also takes a shot at the outgoing Democrat governor by proposing that certain agencies receive only half their funding while Knowles is in office.

Knowles is a two-term governor who is barred by the state constitution from seeking a third consecutive term.

Mulder justified the unusual funding plan by saying Knowles has not heeded lawmakers' demands to make budget cuts in past years.

Knowles officials reacted bitterly to both the budget passed on Monday and to the proposed restrictions on the governor. In a letter to lawmakers, Knowles called it a ''sham'' inserted without warning and after no public testimony.

Bob King, Knowles press secretary, called the House Republican plan ''shenanigans'' that create a distraction for the public on the need to close the state's budget shortfall.

''The governor never talks veto until bills actually come to his desk, but ... I think he sent a very clear signal that this bill in addition to being unworkable and irresponsible is unacceptable to him,'' King said.

The state budget now goes to the Senate for consideration. Mulder invited all House members to a hastily scheduled House Finance subcommittee meeting today to begin considering revenue measures.

Among the revenue measures now in the House are an income tax plan, a sales tax, an increase in the state's alcohol tax and a plan to split permanent fund earnings between dividends and state government.

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