Homer legislator part of 7-person sponsorship

Alternate state budget plan unveiled

Posted: Wednesday, March 22, 2000

An alternative to the $25,000 Alaska Permanent Fund give-away was unveiled Tuesday by Rep. Gail Phillips, R-Homer. Just don't call it the "Phillips Plan."

"It's from a whole group of people," Phillips said. "We can call it 'All Alaskans Share' plan."

The plan calls for passage of House Bill 411, which Phillips said would guarantee permanent fund dividends at, or higher, than current rates for 10 years, continue inflation-proofing the fund and provide for using $350 million to $450 million from the earnings reserve to help fill the budget gap.

It also calls for new taxes.

Phillips said she sees broad-range taxes from all Alaskans, including non-resident workers, tourists and corporations. The plan projects raising an additional $350 million through taxes.

Phillips did not propose any specific taxes, saying the group of seven sponsors wants discussion on the general outline of the proposal first.

''We can do an income tax, we can do a sales tax,'' Phillips said. ''We're saying that in order to balance the budget, everybody in Alaska's got to be involved.''

The remaining budget gap -- anywhere from $200 million to $300 million -- will be filled with interest earned by the Constitutional Budget Reserve.

"There will be continued cuts, yes," Phillips said. "The money coming out of the earnings reserve will fluctuate depending on how good of an investment year it is."

As for getting the plan adopted this session, Phillips is not so sure.

"I don't know if there's much chance of getting this through the Legislature, but it will prime the pump and get something on the table so we can get discussions started," she said. "I'll do everything I can while I'm still here to get it as far along this year as I can."

Phillips is not seeking re-election.

While calling the plan a step in the right direction, Rep. Gary Davis, R-Soldotna, said the call for taxes is problematic.

"Taxes seem to be a strange animal when we're giving away money at the same time," Davis said. "We shouldn't start taking money away until we stop giving it away."

Davis is the House sponsor of Craig Republican Senator Jerry Mackie's plan to give away half the permanent fund in a $25,000 one-time-only payout and use the earnings of the remainder to fund the state budget.

However, Davis was in on the ground floor of the plan announced by Phillips yesterday.

"I worked with them even before the Mackie plan," Davis said. "When I started supporting the Mackie plan, they all knew it, and I still attended the meetings."

Davis said if the new plan ever made it to the floor, and the Mackie plan was dead, he would support it.

"But I'm certainly not going to back off the Mackie plan," he said. "Not at all."

Besides Phillips and Davis, Reps. Andrew Halcro, R-Anchorage; Bill Hudson, R-Juneau; Alan Austerman, R-Kodiak; Lisa Murkowski, R-Anchorage; and John Davies, D-Fairbanks, supported the new proposal.

Under the plan, the dividend would be about $100 smaller in 2001 and 2002 than it would under the current system, but it would be larger in future years because less of the fund's earnings would be dedicated to inflation-proofing the principal.

The plan does not call for a public vote, and that could provoke opposition from Democratic Gov. Tony Knowles.

''The governor would continue to insist that there be no tinkering with the fund or the dividend without a vote of the people,'' said Bob King, Knowles' press secretary.

The sponsor group includes six Republicans and one Democrat, but none of the House's GOP leadership.


Rep. Gary Davis, Republican - Soldotna

The Legislature's Republican majority has not offered a long-range financial plan since the public rejected last year's proposal to balance the budget solely with the earnings of the permanent fund.

The sponsors of the new plan plugged it as a more balanced approach akin to a three-legged stool, and urged their colleagues not to hesitate because of the results of that election.

One group solidly against the plan was the House's four dissident Republicans, who attacked it as another attempt to raid the permanent fund. They also ridiculed the three-legged stool metaphor.

''Its a three-legged dunce stool that people sit on that don't know what 'no' means,'' said Rep. Jerry Sanders, R-Anchorage, referring to the outcome of the Sept. 14 advisory vote, in which voters overwhelmingly rejected the Legis-lature's financial plan.

Associated Press reporter Paul Queary contributed to this story.

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