As the dust settles from Gov. Frank Murkowski's transition into office, the new administration still is working to meet tight deadlines in crafting a state budget.

New forecasts released by the Department of Revenue in late November may give Murkowski more time to address the state's fiscal gap that threatens to deplete the Constitutional Budget Reserve, an auxiliary savings account used to balance the state budget.

Projections from the Department of Revenue earlier this year estimated the $2.075 billion budget reserve account would be depleted by 2004. But an updated forecast released in late November extended the life of the account to 2005, based on projections that Alaska North Slope Crude will average $22 a barrel in future years.

This creates some breathing room for Murkowski, who promised in his campaign to remedy the state's fiscal woes through development of natural resources instead of implementing new taxes.

During the 2002 legislative session an ad hoc bipartisan fiscal policy caucus was unsuccessful in pushing a long-range fiscal plan through both the House and Senate.

The Legislature did pass a dime-a-drink tax on alcoholic beverages, which will generate an estimated $30 million annually for the state. But the alcohol tax will do little to close the fiscal gap that rapidly is approaching $1 billion. Other proposed measures such as an income tax and use of Alaska Permanent Fund earnings were passed in the House but rejected in the Senate.

In early January, Speaker of the House Pete Kott, an Eagle River Republican, said he did not expect any new revenue measures this session. Similar sentiments were expressed by Senate President Gene Therriault, House Minority Leader Ethan Berkowitz and Senate Minority Leader Johnny Ellis.

Kott estimated the Legislature has until late 2004 to start implementing new taxes if development projects are unable to fill the gap. Ellis agreed with Kott's estimation, but added: "The honeymoon for Gov. Murkowski, I think, probably lasts one session ..."

Although no decision has been made, members of the House have discussed the possibility of formalizing the fiscal policy caucus into a Ways and Means Committee. But even if the committee is formed in the House it's not likely to include a Senate counterpart.

With a tight split in the Senate ­ 12 Republicans and eight Democrats ­ Sen. Therriault said committee manpower already is spread thin for Republicans.

"... With our majority being 12 strong, a lot of members are doing double duty to cover the committee structure that we do have on an ongoing basis," Therriault said. "So establishing additional committees beyond that just increases everybody's workload."

With Republicans controlling the state House, Senate and governor's office, Democrats are keeping an open mind to an approach that focuses on oil and gas development rather than taxes.

"Gov. Murkowski has said that he intends to bridge the fiscal gap by developing Alaska's resources, and that seems to be the course that the public wants to follow, and we're going to work hard to make that come to pass. But time ultimately will determine whether that's a wise course or not," said Berkowitz, an Anchorage Democrat.

Meanwhile, budget officials are working with departments to craft a state budget.

State law required the governor to release an annual budget by Dec. 15, less than two weeks after Murkowski was sworn in to office. In order to fulfill the required deadline, Murkowski last month released a duplicate of the budget that was approved by the Legislature last year.

Amendments to that budget are due to the Legislature by March 6, said Cheryl Frasca, Murkowski's director of the Office of Management and Budget.

Frasca said specifics on the budget have not been determined. But the administration should have a clearer picture of how to structure the budget once internal performance audits of state departments are completed.

"We're really reviewing programs ­ what's their mission, why do they exist, how do they deliver their services," Frasca said.

Each department also is required to consider what Frasca called the "90-95 percent scenario." They are asked to determine what they would deliver in terms of services if provided with 90 percent to 95 percent of their current funding.

Jim Clark, Murkowski's chief of staff, says the administration still is in the "homework phase" of its work on the budget.

"... It's going to be a couple of months before we're really prepared to say with specificity what specifically we are going to do," Clark said.

Timothy Inklebarger can be reached at timothyi@juneauempire.com.