Ulmer backs spending cap

Posted: Monday, September 30, 2002

ANCHORAGE (AP) -- Fran Ulmer, the Democratic candidate for governor, is backing a spending cap to go with her support for new taxes.

The concept of a spending cap is more often embraced by Republicans, but Ulmer is going ahead anyway.

''Ulmer is carrying the baggage of free-spending Democrats in Alaska. She's covering her butt by putting herself up there as a conservative,'' said David Reaume, an economist who follows Alaska politics and the economy.

Republicans have reacted to Ulmer's spending cap and her calls for budget cuts with a mixture of skepticism and scorn.

''This woman was part of an administration that proposed huge spending increases every year,'' said Dan Saddler, campaign spokesman for her Republican opponent, Frank Murkowski. ''She must think we're born yesterday if she thinks we won't remember the old Ulmer.''

Saddler refused to say what Murkowski's position is on a spending cap.

Under a tax cap proposed by Anchorage Republican Sen. Dave Donley, the state's general budget would have been limited to increases of 2 percent per year, or about $50 million.

Donley's plan had numerous options for extra spending, by exempting items such as debt payments and spending on emergencies.

A 1981 spending cap was pushed through by Gov. Jay Hammond. But it allows increases every year for inflation and population. With compound interest, the limit has spiraled to an all-but-meaningless $6.5 billion.

Ulmer wants to incorporate the essentials of the 1981 cap: inflation and population. But unlike the 1981 law, she favors a plan in which increases would be calculated anew each year.

Using the Anchorage inflation rate, under Ulmer's plan, the budget would have increased $70 million last year. Two years ago, the increase would have been less than $50 million.

Donley dismissed Ulmer's idea as political pandering.

''Do the math. It's virtually meaningless. It would allow for such huge increases, massive increases,'' he said.

Ulmer said she opposed Donley's plan because of elements that would have limited the power of the governor over the budget. Like Donley, she proposes exemptions for bonding, emergency spending and other items to keep the cap workable.

She waved off the notion that she poached the idea of the cap from the Republicans.

''Since when does the Republican party own this? That's like saying only Republicans support drilling in ANWR. It's ridiculous,'' Ulmer said.

Many legislators are ambivalent about spending caps. Donley's proposal passed the Senate in 2001 but died in the Republican-dominated House this year.

Other states and some cities use a range of techniques, such as property tax caps or dedicating tax revenues to specific needs to enforce budgets, said Alan Auerbach, an economics professor and public finance expert at the University of California Berkeley.

''The whole concept of a spending cap is odd. It's a legislature's job to pass a reasonable budget,'' he said. ''Putting a limit on yourself is a crude policy.''

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