JUNEAU – Gov. Bill Walker has proposed cutting hundreds more state jobs as part of a budget plan that includes the use of earnings from Alaska’s oil-wealth nest egg and ultimately tripling state motor fuels taxes.
Walker’s budget office said the governor’s overall budget plan, if implemented, still would leave a budget deficit of nearly $900 million that would need to be closed with lawmakers’ help.
In a statement Thursday, Walker said the state has already slashed its budget and will look for more ways to reduce costs. But he said Alaska can’t cut its way to prosperity and a critical discussion is needed on raising new revenue.
Alaska, which has long heavily relied on oil revenues to help pay for state government, is grappling with a multibillion-dollar budget deficit amid chronically low oil prices.
Revenue Commissioner Randall Hoffbeck said issues that need to be dealt with include some kind of broad-based tax and further changes to Alaska’s oil and gas tax credit system. But rather than release a suite of proposals — as Walker had previously done with little success — Hoffbeck said the governor wants to work with legislators to devise a package “that everybody can agree to move.”
“It didn’t work the other way, so we’re hoping it’s going to work this way,” Hoffbeck said by phone Thursday.
Heading into this year’s regular session, Walker proposed various industry tax increases, oil and gas tax credit changes and use of Alaska Permanent Fund earnings to help pay for state government. Lawmakers, whose work extended into two special sessions, agreed to credit changes focused largely on Cook Inlet, but other major pieces pushed by Walker faltered.
On Thursday, Walker proposed permanent fund legislation similar to what passed the Senate earlier this year but died in the House. It calls for draws from fund earnings based on a percentage of the fund’s value to help pay for state government. It also would change how annual dividends to residents are calculated. Dividends would be $1,000 for each of the next two years.
Under Walker’s fuel tax proposal, motor fuel taxes would double starting July 1, and increase again, to triple the current rates, on July 1, 2018. The funds could be used for highway maintenance, harbor infrastructure and other transportation needs, according to the Department of Revenue.
Rates for highway fuel, for example, would go from the current 8 cents per gallon to 24 cents per gallon by 2018, which Walker said is in line with the national average.
Walker’s budget for the spending year starting July 1 would cut 795 positions. As part of the cuts, the state expects to have 400 fewer employees by this time next year, said Pat Pitney, Walker’s budget director.
The budget office said already there are 2,500 fewer state employees than two years ago. As of October, there were 24,300 state employees, she said.
Reaction to Walker’s plan was muted.
Sen. Anna MacKinnon, R-Eagle River, and co-chair of the Senate Finance Committee, expressed disappointment with the level of proposed cuts. But she pledged her committee would find places to make government “run more efficiently and effectively.”
Minority Senate Democrats, meanwhile, wanted to see legislation dealing with credits.
Rep. Gabrielle LeDoux, R-Anchorage, said while Walker has gotten things started, House and Senate need to work on responsible ways to fill the deficit. In a release, LeDoux, one of three Republicans who joined with Democrats and independents to form a new House majority for the coming Legislature, said she hopes fixing the state’s “flawed system of subsidizing the oil and gas industry with large tax credits will be part of the fiscal solution.”
