JUNEAU — Gov. Bill Walker likened his first year in office to moving into a new house that catches fire on move-in day, with low oil prices fueling a massive state budget deficit.
But he said his biggest surprise has been how much he enjoys the job, calling himself a problem solver who likes to be a bit creative.
Walker reflected on his first full year in office during an interview with The Associated Press on Monday. He described as a success the Medicaid expansion, which he went ahead with after the issue was tabled for further review by legislators. He said he believed that if the issue were brought to a vote it would have passed, and if it hadn’t passed, he would have honored that. He said it was the right thing to do and he is comfortable in the administration’s position in a lawsuit by the Legislative Council challenging that decision.
The governor also discussed the challenges ahead, including trying to fill an estimated $3.5-billion budget deficit and getting a handle on high health care costs.
Walker took office on Dec. 1, 2014, after defeating then-Gov. Sean Parnell, a Republican. Walker had joined forces with Byron Mallott to mount a stiffer challenge to Parnell. Walker changed his party affiliation from Republican to run as an independent and Mallott, a Democrat, abandoned his own gubernatorial bid to be Walker’s running mate. The state was already dealing with a deficit. But oil prices that during much of the spring and summer of 2014 were above $100 a barrel — and at some points around $110 — began a free fall.
This time last year, the price for North Slope crude was around $56 a barrel. It was around $35 last week.
Alaska’s options become more limited as it continues drawing down its reserves, Walker said. The state has been using savings to get by.
Walker has proposed as a centerpiece of his fiscal plan overhauling how Alaska budgets, putting oil tax revenue into the Alaska Permanent Fund — rather than building a budget around that revenue — and using money generated from the fund to provide a stream of cash that could be used to finance state government. It would change how the annual dividends that most Alaskans receive are calculated. The dividend for next year would be $1,000, about half the payout this year. Since 2005, the dividend has been as low as $845.
Walker also is proposing increases in various industry taxes, changes to the state’s oil tax credit system and reinstituting a personal income tax. The legislative session begins next month.
“The only thing that’s unacceptable for me is to do nothing,” Walker said. The state’s already been warned that its bond rating could be affected if it doesn’t do more to address the deficit.
Some Republican lawmakers have said they’d like to see deeper cuts than Walker has proposed, and Walker said he expects lawmakers will make more cuts. Some Democrats said they’re concerned about the effect of the plan on working-class Alaskans. The governor said he tried to be fair in making his proposals.
Walker said one of his goals is to spend more time with legislators, talking with them and getting their input.
Looking ahead, the budget is expected to be the main focus. But Walker said his administration also is looking at ways to bring down the cost of health care in Alaska and possible further changes to Medicaid. He said it was too early to go into details.
The administration also is expected next year to bring contracts to the Legislature for consideration for the major gas project the state is pursuing with the North Slope’s major producers.