Walker says Alaska is in the ‘gravest fiscal crisis in state history’

In State of the State address, Walker again urges action on deficit

Speaking to the Alaska Legislature Wednesday night, Gov. Bill Walker referenced the words of the director of the Legislative Finance Division and called the state’s current budget trouble the “gravest fiscal crisis in state history.”

“Mr. Teal was right” when he used those words, Walker said.

“Better days will come, but until then, we must make difficult adjustments,” he said.

Walker said the Legislature has already cut the state’s budget to levels last reached in 2007. He used his address, the annual speech to the Legislature, to call for new revenue to close the deficit.

“We can’t continue to cut the budget and expect to improve the situation,” he said.

Walker’s draft budget, now in the hands of the Legislature, calls for spending some of the investment earnings of the Alaska Permanent Fund to reduce (but not entirely eliminate) the deficit.

He said Wednesday that he will reintroduce a plan that passed the Senate (but failed in the House) as Senate Bill 128 last year.

In 2016, Walker’s “pulling together” State of the State speech referenced a picture given to him by Lt. Gov. Byron Mallott. The picture was of a group of Metlakatla residents in the 1900s pulling stumps. They all stood around a single rope, pulling the stumps with pure muscle power.

“We have been pulling together. And I know we can get through anything if we all pull together as Alaskans,” he said.

Walker asked the Legislature at that time to fill the deficit with a comprehensive fiscal plan he drafted. Despite an extended regular session and multiple special sessions, they did not.

On Wednesday night, Walker urged lawmakers to propose alternatives if they don’t like what he’s offering.

“If you don’t support the plan I have proposed, then put another plan on the table,” he said. “If you believe we need to cut more, identify your cuts, and put them on the table. If you think the solution is a different kind of tax than I have proposed, put your tax proposal on the table.”

In his first State of the State address, delivered in 2015, Walker refused to call the state’s fiscal situation a crisis.

“Some might call this a crisis. I call this a challenge and an opportunity,” he said at the time.

He returned to the topic again in 2016 and again refused to call it a crisis. This time was different.

“Last year I said it is only a crisis if we don’t act,” Walker said Wednesday night. “We didn’t. Now we have a crisis on our hands.”

“We are at that point (of crisis),” agreed Rep. Sam Kito III, D-Juneau, following the speech.

Kito said Alaska is in the same position it was when Walker last delivered a State of the State address — except the state now has $3 billion less in savings.

“I appreciate the governor’s insistence upon a fiscal plan,” said Rep. Justin Parish, D-Juneau, following the speech. “I’m glad that he’s calling upon both bodies to present something, and I think that the people of Alaska deserve no less.”

Parish said Alaskans have already sacrificed — through roads going unplowed, highways unpatrolled by police, and fewer beds available at Alaska Pioneer homes.

“People are sacrificing, and we need to act,” he said.

Sen. Dennis Egan, D-Juneau, was pessimistic following the speech.

“I’m worried about my community,” he said.

The Alaska Senate’s Republican-led majority is calling for $750 million in cuts to the state budget over the next three years.

“There’s a lot of issues we have to discuss about public employees. A big percentage of my constituents are some way or another public employees, and it’s up to me to protect them,” Egan said.

By the numbers

Walker’s 6,600-word address, delivered by teleprompter, was 400 words longer than his 2016 speech and more than 1,600 longer than his 2015 address.

It took Walker 46 minutes to finish the oration, which was longer by word count than every presidential inauguration speech but one. It was near the average speaking length of presidential State of the Union speeches since 1966.

Daniel Donkel 6 months ago

Alaska has over $60 Billion dollars in all "savings" accounts and the Governor chooses not to pay or honor the promised $430 earned oil and gas tax credits to the smaller exploration and production companies, these companies trusted the good faith of the state government, this has put Alaska as one place in the world that can not be trusted and not a place that can attract "private investment to Alaska"!

Here is my open letter to legislature;

Dear Alaska Legislators,

Please show the world of investors Alaska is a honorable place to do business and help cause the immediate payment of these earned exploration and production tax credits in the amount of $430 million dollars, get this by the end of January!

The damage of the Governor's VETO is killing Alaska's reputation around the business world!

Then once you helped earned your state's honor back after you pay these tax credits of $430 million out of the $60 billion in savings then consider following the advice of proven leaders!

These leaders of the past helped Alaska get to where it is today, people like "Ed Rasmuson is a retired banker. Bill Corbus is a former commissioner of the Alaska Department of Revenue. Jeff Cook is an energy consultant. Gail Schubert is CEO of Bering Straits Native Corp. Mike Navarre is mayor of the Kenai Peninsula Borough".

I will be praying for the Governor and all the state Legislators as you all choose to either PLAN (A.) You may want to call it "The Rick Rydell " Plan or Plan (B.) The four point plan of the leaders that got Alaska to where it is today noted in this report.

OPENING DAY OF THE ALASKA LEGISLATURE I SPOKE ON THE RICK RYDELL RADIO SHOW, HEAR MY VIEWS AT 1.03 INTO THE SHOW, http://650keni.iheart.com/medi...

THE RICK RYDELL PLAN OR PLAN (A.) Keep things as they are and using the $60 billion in savings ( CBR, PF), this is money the oil Indusrty gave the state and can help keep Alaska strong until oil prices get back to $100.00 per barrel and now we see clearly the famous the tax credits have panned out with Pikka, Cosmopolitan, Smith Bay, Mustang, Point Thompson, Sabre, Placer, Kitchen Lights, Kenai Loop, Sword and many more new discoveries!

Alaskans and state leaders can simplify hope all these new discoveries can to be put online without more agency red tape and more delays and then when oil prices to get back to normal over the next few years all will be fine and the false alarm will not have been able to do the Alaskan people so much harm as this fake sky is falling pitch to use the Permanent Fund money for a Gas Pipeline or what ever!!

PLAN (B.) Follow the advice of those that got Alaska where it is today, they are all millionaires but aren't' all Alaskans? Ha Ha.

HERE IS PLAN (B.) "The options for a long-term fiscal plan are the same ones Alaska has been looking in the past several years. We see four major pieces to any solution:

• An orderly, responsible, managed use of Permanent Fund earnings, including a change in how the dividends are calculated. We cannot spend the same dollar twice, which means a dollar that goes to schools, roads, troopers, the courts and other public services cannot also go to dividends. Legislators are fully aware that choices must be made. If, for example, the Legislature adopted a percent-of-market-value approach to limiting the annual withdrawal from the Permanent Fund, and if that were set at 4.5 percent of the fund's average market value looking back five years, the maximum draw for fiscal 2018 would be about $2.43 billion. And if, for example, you wanted to maintain a $1,000-per-person dividend from that total, that would leave about $1.73 billion for public services.

• An orderly, responsible, managed examination of state spending and potential for further budget reductions in the range of $250 million to $500 million implemented over two to three years to lessen harm to the economy and allow the public, municipalities and businesses time to prepare for reduced services.

• A responsible broad-based tax, such as a modest personal income tax on Alaska's higher income earners and/or a sales tax that would accomplish several goals: 1) Give all Alaskans a personal stake in how state money is spent; 2) Collect income from nonresidents who come to Alaska to work, and go home to spend their money; and 3) Help diversify state revenues from our total dependence on natural resource prices and investment earnings.

• Excise and industry-specific taxes of perhaps $100 million a year on motor fuels, alcohol, tobacco, fisheries and mining.,Bad,,Very Bad ,, " Don't do this plan (B.), Go with Plan (A.) and make Alaska Great again, I see higher oil prices ahead and many big oil discoveries due to good tax credits, so use part of the $60 Billion in savings ( PF & CBR) paid by oil income, pay the bills and let Alaska prosper with new oil and higher oil prices!

Joshua Peters 6 months ago
I would like to know why it is that you think that oil prices are going to rise again in the future? Clearly, it has been continually acknowledged that reduction in oversight by government regulation will allow more oil to be tapped into.  The price of oil is not based off only supply and demand but largely speculation of oil futures.  Prices have a minimal chance of rising under a new softer environmental impression.   Unfortunately you are right, taking from the savings may be the only way to go, but not to keep a budget that bare bones our education and public services.  Please don't fall into the same thought process that got us into this mess of oil being worth what it will be tomorrow.  If you have a quarter in your change purse, it's a quarter.  It may have once been a nickel and may some day be a dollar.  But today it's a quarter.  Spend it like a quarter and don't tell me what it might be or once was.  
Robert Jones 6 months ago
Donkel is not a resident of Alaska, he has no idea what he is talking about. Talk on the hill - ignore him and he will go away.
Garrison Gibson 6 months ago
It's new ideas needed for the new era. It isn't 1974 now. Change constitution to let private schools get equal k-12 funding. Save on education facility and union cost. Cut gov. size & leave PFD alone. Support wind,solar and geothermal instead of oil. Build rainshelter for homeless to sleep under near bridge. Act like a supporter of free enterprise instead of Rube Goldberg oil schemes.

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