Alaska budget has spending cuts, tax hikes

JUNEAU, Alaska, March 6 (UPI) -- Gov. Frank Murkowski unveiled a $2 billion budget proposal that doesn't dip into Alaska's sacred Permanent Fund that pays dividends to state residents, but does include fee and tax hikes that had Democrats in the state Legislature Thursday accusing the conservative Republican of already reneging on his campaign promises.

Murkowski's first gubernatorial budget included a net reduction in spending of $55 million along with a 12-cent increase in the gasoline tax as well as various fees paid both by residents and visitors that would keep the state functioning until the anticipated development of natural resources begin to pay off.

"Alaskans want their state government to be more efficient and cost effective, and I have made a commitment to them to control spending, stabilize revenues for the short term, and increase revenues over the long term," promised Murkowski, who was elected governor last November after a 32-year career in Congress.

Murkowski said he was a "firm believer" in user fees for government services and vowed in his speech Wednesday night to not propose creating a state income tax or to siphon money out of the Permanent Fund, an investment institution that since the 1970s has provided Alaskans with an annual dividend of varied amounts from the investment of royalties the state receives from energy producers.

"In case there is any doubt, I am not proposing a personal income tax or taking people's Permanent Fund dividends to pay for increasing the size of government," Murkowski said. "I never have and never will."

The plan would eliminate a $250 monthly "longevity" bonus paid from the fund to around 18,000 senior citizens.

Democrats, however, portrayed the higher user fees and gasoline-taxes as the kinds of tax hikes the GOP governor had pledged not to raise during his campaign.

"The shattering sounds you heard tonight were the sounds of Gov. Murkowski breaking his campaign promises," Senate minority leader Johnny Ellis told the Anchorage Daily News. "I heard Frank Murkowski promise not to raise your taxes."

Republican lawmakers were generally lukewarm over the proposed spending cuts and preferred to tell reporters they were buoyed by Murkowski's willingness to hack away at state spending.

GOP leaders promised they would not rubber-stamp the budget plan and would review the cuts that include reductions in education, the motor vehicles department, and the commercial fisheries division of the Department of Fish and Game.

(Reported by Hil Anderson in Los Angeles)