Wielding his veto pen like a set of spurs, Gov. Bill Walker cut into the state’s budget Wednesday to the tune of about $1.3 billion — an effort, he said, to force the Alaska Legislature to fill the state’s $4 billion budget hole during its upcoming special session.
If allowed to stand, Walker’s vetoes will impact Juneau’s economy to a tremendous extent, said city officials.
In addition to halving the Permanent Fund Dividend checks, now expected to be around $1,000 this year, Walker cut more than $30 million from school debt reimbursement, a move that City manager Rorie Watt said would effectively leave Juneau on the hook for about $3 million more in it’s Fiscal Year 2017 budget.
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“We would basically be going back to our budget that we just passed — that becomes effective Friday — to determine whether we have to cut expenditures or try to raise revenue,” Watt said in a telephone interview Wednesday afternoon.
Though the vetoes don’t spell “fiscal Armageddon” for the city like they might for the state, Watt said that they could force some “pretty stern budget cutting exercises” on the Juneau Assembly if the Legislature doesn’t appease Walker by the end of the coming special session.
“It’ll be a difficult time because that’s a lot of money,” Watt said. “It’ll probably have a significant impact on at least a couple programs and on employment in the city.”
Aside from the $3 million in school debt reimbursement that the city will have to account for, Watt is worried that the reduction in PFD money might mean less revenue for the city in the form of sales tax. If Juneau has about 33,000 residents, and each resident is getting about $1,000 less than they did last fall, then the city’s economy will be missing about $33 million come October.
Chief among Assembly member Jesse Kiehl’s worries, however, are the state job losses that impact the state capital more than any other city in Alaska, he said Wednesday. Kiehl also works as a legislative aide to Sen. Dennis Egan, D-Juneau.
The budget that the Legislature passed was down more than $600 million in unrestricted general fund money than the previous year, and that’s where state employee salaries come from.
“There are a huge number of state employees who got pink slips,” Kiehl said. “The impact on Juneau will be disproportionate, and that’s what’s keeping me awake at night”
This, he worries, will lead to diminishing property tax returns for Juneau in the years to come, which, unlike sales tax revenue, cannot be bolstered by tourism.
Kiehl and Watt both said they hope Walker’s vetoes will prompt the Legislature to act come July 11, when the special session starts. Kiehl said he thinks it will, if for no reason other than the reduction of the PFD — a first in state history.
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“That one veto in particular changes the political math,” he said. “That’s never been done before. We have a governor who has shown more political guts than I’ve ever seen, so I think it changes the landscape and things may break loose.”
• Contact reporter Sam DeGrave at 523-2279 or sam.degrave@juneauempire.com.
