Murkowski turns up heat for action

Posted: Sunday, May 02, 2004

JUNEAU A special session could be called if lawmakers don't agree to let Alaska voters decide whether to finally tap the permanent fund for state government.

Gov. Frank Murkowski floated the prospect of a special session while talking to reporters Friday, as the Senate Majority Republicans and Democrats remained divided on the issue with just two weeks left in the legislative session.

Murkowski said he would hate to have to inconvenience lawmakers and also cited the additional expense of extending the session.

The Legislature is supposed to adjourn May 11 unless Murkowski decides to call a 30-day special session. The increased expense of a special session costs state coffers about $25,000 per day, said Pam Varni, executive director of the Legislative Affairs Agency.

''I would hate to inconvenience people to have to do it at a later date and add additional expense to what it would cost to extend the timeframe,'' Murkowski told reporters.

He refused to be more specific about whether he would call lawmakers into a special session. But for some lawmakers, the message was clear.

''How difficult is it to read between that line?'' said Senate Minority Whip Kim Elton, D-Juneau.

The Senate Finance Committee is expected to begin considering a constitutional amendment to change the way the $28 billion Alaska Permanent Fund is calculated. That amendment could make at least $1.3 billion available from the permanent fund each year.

If voters approved the measure in the Nov. 2 general election, it would trigger a bill narrowly approved in the House to spend the money.

Under the House measure, about $650 million would be earmarked for dividends to eligible Alaskans and the rest would go to help close the state's chronic budget shortfalls.

About $590 million would be used ostensibly for K-12 education and $60 million would be dedicated for assistance to local governments, under the House bill.

Earlier this session, the House approved another constitutional amendment that would cap state spending. Murkowski has said the spending cap measure is needed to win voter support for using the permanent fund.

However, his plan has no shortage of opponents on both sides of the aisle, making it more difficult to muster the two-thirds vote needed in the Senate, where Republicans control by a 12-8 margin.

''Unfortunately, it looks like it is going to play out until the bitter end,'' said Sen. Con Bunde, R-Anchorage.

Democrats complain that Murkowski's fiscal plan is a tax on dividends which will decline by up to $360 by 2007 and would hit low-income Alaskans hardest.

They also want any permanent fund constitutional amendment to include a guarantee that dividends will continue to be paid in the future something many GOP lawmakers oppose.

Some Republicans, meanwhile, like Senate Finance Co-chair Gary Wilken, R-Fairbanks, don't see the need to tap the fund.

Alaska has $2 billion remaining in its Constitutional Budget Reserve, the fund lawmakers have used in past years to balance state budget shortfalls.

In addition, Alaska relies on oil for more than 80 percent of its revenues. Near record high prices have nearly erased this year's expected deficit.

But Murkowski bristled at the excuses such as reduced dividends or a hefty budget reserve for not solving the state's chronic budget deficit. Murkowski administration officials have said the permanent fund is a better alternative than statewide taxes.

''I just don't understand this mentality that's out there that says this isn't the time to do it, or it's a threat to the dividend when it isn't,'' Murkowski said.

The governor has said he won't allow the permanent fund to be used without a public vote. By the next general election in 2006, the state expects to face a $785 million budget shortfall, he said.

''Why not let the people vote on it? What are we afraid of?'' Murkowski said Friday. ''I'm not afraid to let the people vote on it.''

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