Republicans refuse to support budget package

Plans fails to win backing of House

Posted: Sunday, April 21, 2002

JUNEAU -- House Republicans are refusing to support a budget plan that could have bridged Alaska's $1 billion revenue gap.

After three weeks of negotiations, the plan failed to win support -- a sign that any comprehensive package of new revenue measures this year is all but dead.

A day before Friday's closed-door Republican meeting, House Speaker Brian Porter told his colleagues to come prepared to make a decision on a package of revenue bills, including a tax on alcohol, a 1.5 percent statewide sales tax, and measures to use Alaska Permanent Fund earnings to fund state government.

The 28 Republicans emerged without majority support to move the package to the House floor, according to the Anchorage Daily News.

''We cannot agree on how to move forward with a comprehensive plan,'' said Rep. Jim Whitaker, R-Fairbanks, who has spearheaded the House Republican effort to address the fiscal gap.

The looming budget gap sparked intense debate in the House this winter. But negotiations between Democrats and the majority Republicans have yielded no agreement.

Should the state continue making up the gap with the Constitu-tional Budget Reserve, that $2.5 billion pot will run out in 2004.

Whitaker and Porter said they would seek support from Democrats on individual revenue measures: a sales tax, an alcohol tax or use of permanent fund earnings.

''It's still moving,'' Porter said, adding ''I'm not enthusiastic in my belief we'll make progress.''

Democrats have insisted on two conditions for a fiscal plan: that it have progressive elements that minimize impact to low-income persons and that it raise the entire $1 billion needed to fill the gap. A Republican push for solitary tax bills or to use Fund earnings won't meet the second condition.

Alaska's fiscal gap has dominated the legislative session. Senate leaders say they don't support any large, new revenue-producing measures this year and, instead, want budget cuts and a spending limit. Gov. Tony Knowles forwarded an income tax to raise $350 million a year. His bill has gone nowhere.

In March, the House Finance Committee moved a series of measures to the floor, including a 3 percent sales tax and a bill to take about $800 million a year in Permanent Fund earnings for state spending.

At the time, it was unclear whether the measures would pass. Both Democrats and centrist Republicans agreed that Perman-ent Fund earnings and a statewide tax on either sales or income must be part of the fix.

But a group of Republicans oppose any measures outright, meaning that any bills needed Democrat support to pass. And Democrats vehemently oppose the sales tax because it is regressive.

When the bills moved to the House floor, Democrats pushed an amendment to replace the sales tax with an income tax. The move failed. With the Democrats ready to defect and scuttle the entire plan, Porter pulled the other bills back into negotiations to seek a compromise.

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