Legislators look for budget cure

Posted: Sunday, December 02, 2001

ANCHORAGE (AP) -- A third of Alaska's legislators are taking yet another shot at addressing the state's upcoming budget crunch.

Twenty-four members of the Legislature's Fiscal Policy Caucus, including some Democrats, assembled Friday. By Saturday afternoon, they hope to have a united course of action to tackle the looming shortfall when the state's budget reserve runs out.

''I think we have a mission and that we have committed to doing something. And we know that getting to the end goal is not going to be easy,'' said Rep. Lisa Murkowski, an Anchorage Republican. ''I would hope we would be able to walk out of here saying this is what we plan on working on this next (legislative) session.''

Caucus members held town meetings across the state to gather ideas and explain the budget gap.

The caucus is considering options that include such politically thorny measures as a state income tax, a sales tax, cuts to state programs, increased taxes on the oil industry, alcohol taxes, and use of earnings from the Alaska Permanent Fund.

''We're trying to do it by consensus, instead of playing partisan games,'' said Democratic Rep. Ethan Berkowitz, the House minority leader.

The fiscal policy caucus, while large, does not include such key legislative figures as the House speaker, the Senate president and the finance committee chairs. The caucus is dominated by House members and has received scant support from the Senate majority.

Some in the Legislature feel that the fiscal policy caucus is a subversion of the regular committee process, and others argue that state reserves are intact right now and any attempt to force a fiscal plan on future legislators will not work.

But the legislative leadership, perhaps for political expediency, is unwilling to step forward, said Rep. Andrew Halcro, R-Anchorage.

So caucus members figure they must launch their own attempt to steer the state away from a fiscal cliff.

Gov. Tony Knowles supports the caucus and has asked to meet with its members in the next few weeks to discuss the plan they expect to craft on Saturday.

Alaska Municipal League President Jack Shay, representing most of Alaska's local governments, on Friday endorsed their attempt to work out a state fiscal plan.

The issue is simple. State revenue has slipped in the past decade as the North Slope oil flow has diminished. Oil accounts for about 80 percent of state revenue.

Only two times in the last decade has the state covered its costs, when oil prices rose dramatically.

In leaner years, the state draws from its Constitutional Budget Reserve, which currently hold $2.8 billion.

With the lower oil prices of recent months, Larry Persily of the state Revenue Department told the legislators Friday that the state will likely pull $900 million from that reserve by the time the current fiscal year ends next June.

State economists now expect the budget reserve to run dry in the late summer of 2004, Persily said, leaving a billion-dollar hole to fill in the state budget.

In years past, the Constitutional Budget Reserve has been drawn down but rebounded when new money came in from the settlement of oil tax disputes.

''We have no more big cases left to settle,'' Persily said.

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