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Governor Applauds Passage of Tobacco Tax Hike
But Disappointed Legislators Failed to Address Fiscal Gap, Worker's Comp


June 25, 2004

Juneau, Alaska - While expressing disappointment that the Legislature failed to take action on a fiscal solution during the special legislative session, Governor Frank Murkowski applauded the passage of the tobacco tax increase.

"Increasing the price of cigarettes is proven to reduce teen smoking," Murkowski said. "The 1997 tobacco tax increase has already discouraged an estimated 1,800 young Alaskans from taking up smoking and becoming addicted to tobacco. As a grandfather, I'm personally very gratified by the Legislature's decision to use a proven tool to improve our kids' public health."

Murkowski expressed disappointment that the Legislature made no progress on his proposal for a solution to the state's long-term fiscal problems, saying that Alaskans expect and deserve resolution of the state's fiscal problems.

"I proposed a plan guaranteeing Alaskans a dividend of at least $1,000, ensuring a source of needed funds for our schools, providing a community dividend to help local governments, and bringing modern management to our largest financial asset, the Permanent Fund," Murkowski said. "But the Legislature didn't give Alaskans the chance to vote on my plan and they failed to come up with one of their own."

Under the Governor's plan, the Permanent Fund would have been managed as an endowment, limiting the Legislature's authority to appropriate no more than 5 percent of the fund's value each year. A minimum of $1,000 or 50 percent of that funding (whichever is higher) would have been dedicated to dividends, 45 percent to K-12 and university education, and 5 percent to local communities. The plan also included a constitutional spending limit. The Legislature adjourned today without taking action on any of those proposals.

"We need fiscal certainty during the next 10 years to bridge the expected shortfall between now and when new revenues from resource development kick in," Murkowski said. "To bridge this gap, we must use our financial assets wisely and develop our natural resources. We are working to develop the gasline, extend the railroad, open new mines, and develop new areas like the Alaska Peninsula and Western Alaska."

In the absence of such a plan, the governor remains committed to withdrawing no more than $400 million from the Constitutional Budget Reserve each year, to building a smaller, more efficient state government, and to working toward developing our natural resources and strengthening Alaska's economy.

The Legislature also failed to provide relief for local communities facing difficult fiscal situations, he said.

The governor also expressed his disappointment that the Legislature failed to take action on workers' compensation insurance reform.

"We cannot sustain an economy and provide jobs with workers' compensation rates rising an average of 21 percent a year," he said. "Every small business in Alaska ought to be asking the Legislature why nothing has been done to fix this problem. There is simply no excuse."


Source of News Release:

Office of the Governor
Web Site


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