JUNEAU Gov. Frank Murkowski sent a strong message to entrenched Senate lawmakers that a special session is likely without a fiscal plan this year that raises millions for state coffers.
After two days of gridlock during floor debate, Murkowski warned Friday that an impasse over key elements to his long-term fiscal plan ''will prolong the session.''
The Legislature is expected to adjourn Tuesday unless they are called into a 30-day special session.
''The bottom line, and the message is (that) we are going to stay at it until we get it done,'' Murkowski said.
The Senate on Friday rejected a constitutional amendment that could give the Legislature permission to spend annual revenues from the permanent fund to help close the state's budget gap.
Senators also rejected a proposed 3 percent statewide sales tax Friday on a 7-12 vote.
Lawmakers voted 5-15 against the permanent fund proposal despite a visit to the gallery from Murkowski and an attempt by Senate President Gene Therriault to find some middle ground between Democrats and Republicans.
The proposal could come up for a reconsideration vote Saturday, but it did not.
Dubbed the ''percent of market value'' amendment, the proposal would limit annual withdrawals to 5 percent of the permanent fund's five-year average value. That would make about $1.3 billion available each year.
Senate Finance Co-Chair Gary Wilken, R-Fairbanks, said lawmakers are turning to permanent fund earnings too early since the state still has $2 billion in its reserve account to balance short-term budget deficits.
In addition, POMV supporters will not be able to win over voter support with the din of a presidential election and competitive U.S. Senate race in November, Wilken said.
''You aren't going to be able to get on the air or in the papers to let people know, so the demagogues are going to win this,'' Wilken said. ''You can't put our thought on a bumper sticker. They can.''
The Senate also failed for the second day in a row to come up with the 14 votes needed for a constitutional amendment to implement a spending cap. All eight Democrats voted against it, after GOP lawmakers refused to exempt education.
Murkowski wants the spending cap to be on the November 2004 ballot at the same time as the amendment to give the Legislature permission to use the permanent fund to close chronic budget deficits.
Murkowski wants lawmakers also to approve a bill that divides the money between dividends to eligible Alaskans and government.
Earlier this session, the House approved a version of that bill, which earmarks about $573 million for state government and $64 million for local governments.
The Republican governor has said such a plan would nearly reverse Alaska's chronic budget shortfalls that have averaged about $400 million.
But Murkowski has said the spending cap measure is important to raise the likelihood that voters will approve using permanent fund money for government.
Both constitutional amendments require a two-thirds majority vote and Republicans, who control 12 seats in the Senate, need at least two votes from Democrats for any measure to pass.
However, Therriault was unable to gain support from even half his Republican caucus for his plan. Sens. Con Bunde, R-Anchorage; Ralph Seekins, R-Fairbanks; Bert Stedman, R-Sitka; Gary Stevens, R-Kodiak; and Therriault cast the only yes votes.
Chief of Staff Jim Clark held closed door meetings with Senate Democrats and Republicans on Friday in an effort to keep the two measures alive.
Many Senate Democrats want a guarantee written into the constitutional amendment that dividends will continue to be paid under the so-called POMV proposal that Murkowski wants.
A compromise proposal offered by Therriault failed to draw any Democrat support. In addition, six Republican lawmakers voted against it: Sens. Bunde; Stedman; Scott Ogan, R-Palmer; Ben Stevens, R-Anchorage; Tom Wagoner, R-Kenai; and Gary Wilken, R-Fairbanks.
Earlier, Majority Republicans rejected a Democrat demand that at least two-thirds of the money used from annual permanent fund earnings be earmarked for dividends.
Murkowski also delivered lawmakers a list of essential bills he wants approved before the session ends next week.
In addition to some resolution of the fiscal gap, Murkowski wants a $1 per pack tax increase on cigarettes and legislation to change the state's shallow gas leasing program, the Alaska Human Rights Commission and the workers' compensation system.
Murkowski also wants lawmakers to approve a bill to convert a Pioneer Home in Palmer into a facility for elderly veterans.
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