Gov. Bill Walker will submit his predecessor’s recommended budget to the Legislature, but only as a placeholder. On Friday, Alaska’s newest governor released former Gov. Sean Parnell’s proposed fiscal year 2016 budget, saying he would send it on to the Legislature until he’s done drafting his own.
According to Alaska statute, Walker must turn in a state budget proposal to lawmakers and the public by Dec. 15. With the deadline fast approaching, he will submit Parnell’s operating budget and a minimal capital budget of his own. Walker made it clear in his Friday announcement that he doesn’t endorse Parnell’s budget and will have his own submitted by the Feb. 18, 2015, deadline for changes. Parnell handed over his budget proposal to Walker on Dec. 1 after Walker was sworn in.
Parnell’s proposed operating budget for FY 2016 is $5.3 billion in unrestricted general funds, a reduction of 3.8 percent from 2015’s $5.5 billion. The proposed capital budget — what the state spends on projects — is $219.5 million, down about 63 percent from 2015’s $595 million, and includes $3 million in unrestricted general funds for water treatment improvements in Juneau. Parnell’s proposal also added 24 full-time positions in the state.
These numbers aren’t relevant and could change completely once Walker’s cabinet has a chance to talk about it, said Pat Pitney, director of the Office of Management and Budget, the staff responsible for advising, crafting and publishing the governor’s budget. The Walker administration will develop its budget over the next three to six weeks, she said.
“We just posted what it was that Parnell gave us,” Pitney said. “Then we are going to analyze what capital projects and what operating items meets this administration’s priorities.”
Pitney was hired by the Walker administration, replacing former director Karen Rehfeld. She comes from the University of Alaska system, where she worked for more than 24 years, most recently as the vice chancellor of administrative services at the University of Alaska Fairbanks. Incidentally, she was also the first woman to win an Olympic gold medal for air rifle shooting in 1984.
Although Parnell’s budget hasn’t been endorsed by the Walker administration, that decision was made for only one reason: lack of time, Pitney said. With so many new people to hire, Walker and his crew haven’t had a chance to talk about budgetary goals. They don’t yet have a dollar amount to which they’d like to slim the budget down.
“Because we haven’t sat down with the administration and worked with the new commissioners, we don’t know how (Parnell’s budget) is going to be different than how we want to go,” she said. “We want to have those deliberate discussions about what it is we want to do as an administration. There’s no judgment on the Parnell one, good or bad.”
During his campaign, Walker talked about making cuts across the state budget, and criticized Parnell for “deficit” spending in light of shrinking revenues.
As North Slope crude oil prices continue to fall, the state’s cashflow — and next year’s budget — is taking a hit. On Friday, a barrel of Alaska oil cost $67. This fiscal year’s state budget is built on an average $105-per-barrel price. Of the $4.5 billion budgeted in general fund unrestricted revenue, 85 percent of that, or $3.94 billion, was expected to come from oil revenue.
The state was already expecting to draw $1.34 billion from its reserves to supplement general fund spending and balance the budget this year, according to a past Empire report. Alaskans won’t know how that number will change due to slumping oil prices until the Department of Revenue releases its fall revenue forecast later this month and the 2016 budget is finalized during the next legislative session.
Pitney said that “now that most (commissioners) are on board,” the cabinet can talk about departmental cuts.
“I think they all know that the revenue picture is challenging,” she said. “Constraint is going to be there.”
• Contact reporter Katie Moritz at 523-2294 or at firstname.lastname@example.org. Follow her on Twitter @katecmoritz.