Governor says Alaska’s deficit will not be fixed in 2018

Bill Walker predicts only part of $2.7 billion fiscal gap will be fixed this year

Gov. Bill Walker answers a range of questions during an interview with the Empire in his Capitol office on Friday, Jan. 5, 2018. (Michael Penn | Juneau Empire)

Gov. Bill Walker is an optimist, but even he thinks Alaska’s multibillion-dollar budget deficit won’t be resolved this year.


Walker spoke to the Empire in an interview Friday, a little over one week before the start of the 2018 Alaska Legislature.

“I don’t anticipate we’ll completely close the gap this year,” Walker said.

In the budget proposal he released to lawmakers in December, Walker plans to use a portion of the Alaska Permanent Fund’s investment earnings to pay for government services and reduce the deficit. Accountants from the Legislature and the state Office of Management and Budget each expect the deficit to stand at $2.7 billion when the state’s new fiscal year starts July 1. That could be reduced to about $700 million, if lawmakers pass a law tapping the Permanent Fund.

As a side effect, the Permanent Fund Dividend would be permanently cut. Walker temporarily cut the dividend in 2016; the Legislature did so in 2017.

A version of the Permanent Fund legislation passed the House and Senate last year, but a compromise wasn’t finalized before the end of the year.

Though lawmakers are starting 2018 with much the same deficit they started 2017, Walker believes the Permanent Fund legislation is a “significant shift” in the Legislature’s thinking and that lawmakers have realized there is a limit to what can be accomplished through budget cuts alone.

“I think there’s been a recognition of what happens when you cut too much. I think we saw that with public safety,” he said. “It’s just gone too far. We sort of need to put back in the additional prosecutors, the additional troopers.”

Walker’s budget calls for additional funding for public safety, something he previously announced last year.

Walker is calling for a 1.5 percent payroll tax to pay for construction and maintenance projects, and he said that tax could reduce the deficit as a side effect, but that’s not its main goal.

“Putting Alaskans to work is a high priority,” he said.

With that goal in mind, Walker said he’s been pleased with the interactions he’s had with President Donald Trump and his administration. Walker said he has spoken to the president a half-dozen times by phone and in person at various receptions, and he believes the president “sees Alaska as a necessary piece for America to be energy dominant.”

“That’s probably the most signfiicant change that I’ve seen,” Walker said of the difference between the Trump administration and the administration of President Barack Obama.

He said he’s also happy with Secretary of the Interior Ryan Zinke, who on Thursday announced plans for significant offshore oil and gas drilling lease sales in Alaska’s federal waters.

Walker is less pleased with the decision of Attorney General Jeff Sessions to rescind federal guidance for Alaska’s marijuana industry. He said the state is not planning to take any action in response to Sessions’ move and will adopt a wait-and-see policy.

“I don’t know that there will be anything different coming out of it,” he said of Sessions’ action.

Walker, speaking in his Capitol office, declined to talk about his campaign for re-election or what effects that campaign might have on the legislative session.

Two sitting lawmakers, Sen. Mike Dunleavy, R-Wasilla, and Rep. Mike Chenault, R-Nikiski, are also running for governor.

Walker did discuss a ballot measure that would place new restrictions on development in Alaska in order to protect salmon streams. Walker said he does not support the Alaska Salmon Habitat Protection Standards and Permits Initiative because it overly restricts development, and he feels the topic is one better suited for the Legislature to address.

The governor declined to talk about another ballot intiative, one sponsored by two sitting House members, that would impose conflict-of-interest and campaign finance rules upon legislators.

“That one I’ll probably refrain from weighing in on,” said Walker, whose relationship with the Legislature has been fraught.

The governor added that he expects big things from the proposed trans-Alaska natural gas pipeline project in 2018, and that he’s continuing to build relationships with Chinese officials and businesses interested in investing with Alaska.

• Contact Empire reporter James Brooks at or call 523-2258.



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