Tough choices await administration

Posted: Sunday, November 23, 2003

Putting the state's fiscal crisis in perspective, Rep. Mike Hawker, R-Anchorage, chair of the House Ways and Means Committee, said Alaska faces some stark realities, and the Legislature and Gov. Frank Murkowski's administration will have to make some tough choices in order to balance the budget.

Those choices, Hawker said, are going to cause some Alaskans pain. The best outcome lawmakers can shoot for is to leave next year's session knowing the pain has been fairly distributed across state programs.

Here are some of the facts facing state lawmakers as they ready for the upcoming session, according to Hawker:

Of the $2.135 billion in state general-fund dollars spent in the fiscal year 2004 operating budget, 67 percent covers the most basic of state services The departments of Education; Public Safety; Transportation and Public Facilities; and Health and Social Services. Much of the fat already is gone from those departments. A little more than $212 million represents University of Alaska funds.

That leaves roughly $471 million to cover all other state programs. Even cutting all of that would not wipe out the annual deficits expected over the next few years.

In the last 11 years, state budgets have spent $5.5 billion more than state revenues brought in.

The Constitutional Budget Reserve, which has been used to make up annual shortfalls, will total about $1.7 billion by June 30.

Dipping into the Constitu-tional Budget Reserve at an anticipated rate of $600 million to $650 million a year will drain the savings account in less than three more budget cycles.

Budget assumptions presume Alaska oil continuing to sell at $25 a barrel a price rate for which there is no guarantee.

Practically speaking, Alas-ka's revenue stream about 80 percent of which is derived from oil coming down the trans-Alaska pipeline is not expected to increase significantly in the near future.

The best hope is another major oil strike or construction of the natural gas pipeline. But it would be seven to 10 years before a pipeline could be brought on line and that's if the project had "started yesterday," Hawker said.

Gov. Murkowski said earlier this year that as much as $250 million should be cut from the fiscal year 2005 budget. But public opinion regarding cuts may be changing.

A recent poll by Murkowski's office suggests 60 percent of voters think enough has been cut from the budget, and that more would harm important state programs. Hawker said that's backed up by opinion in his own Anchorage district.

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